Markets
Canada’s Market Data Problem
Canada’s Market Data Problem
Canada’s equities markets are just like any other market. They are made up of buyers and sellers that exchange goods – in this case, securities.
Information is what allows buyers and sellers to make decisions in the market. However, if that information is inaccurate or incomplete, it can impact the health of the market.
Information Failure
Today’s infographic from the Aequitas NEO Exchange details the current “information failure” that is happening in the Canadian market.
What’s information failure? It’s when some, or all, of the participants in an economic exchange do not have perfect knowledge. This leads to a misallocation of scarce resources and it appears to exist in numerous market exchanges.
In the case of securities in Canada, the problem arises from the market data that investors are using to make buying and selling decisions.
Canada’s Market Data Landscape
Market data is simply the information that investors see when buying or selling a security – for example, prices (bid, ask) or liquidity indicators (volume, market depth).
Aside from the TSX itself, there are 13 other trading platforms that facilitate the buying and selling of securities in Canada. These range from exchanges (like the CSE or Aequitas NEO Exchange) to more proprietary platforms (Instinet or Liquidnet) which are used primarily by institutions.
Either way, trading is being done across all these platforms each day, and each exchange generates its own market data on prices and liquidity.
The problem?
Many investors only see just part of the whole picture. For example, retail investors that buy through an online brokerage account may only see data from the TSX and TSX-V, which together account for about 59% of volume traded (as of Q4 2016).
The Consequences
By only accessing partial market data, the true liquidity or price of a security may not be accurately represented.
Here’s an example of how this unfolds in real life:
- An investment advisor wants to buy a particular ETF for a client.
- A partial view of the market might mean that the security looks less liquid than it actually is.
- As a result, the advisor may choose to put the client in a different, less optimal fund.
Here’s another example:
- An investor is considering several companies in which to invest.
- A partial view of market activity can result in companies appearing more, or less, attractive than others.
- Uninformed investment decisions lead to less optimal investments and the potential misallocation of capital.
In other words, information failure can affect investors and their portfolios directly – and can result in important consequences.
Markets
Visualizing Global Inflation Forecasts (2024-2026)
Here are IMF forecasts for global inflation rates up to 2026, highlighting a slow descent of price pressures amid resilient global growth.
Visualizing Global Inflation Forecasts (2024-2026)
Global inflation rates are gradually descending, but progress has been slow.
Today, the big question is if inflation will decline far enough to trigger easing monetary policy. So far, the Federal Reserve has held rates for nine months amid stronger than expected core inflation, which excludes volatile energy and food prices.
Yet looking further ahead, inflation forecasts from the International Monetary Fund (IMF) suggest that inflation will decline as price pressures ease, but the path of disinflation is not without its unknown risks.
This graphic shows global inflation forecasts, based on data from the April 2024 IMF World Economic Outlook.
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The IMF’s Inflation Outlook
Below, we show the IMF’s latest projections for global inflation rates through to 2026:
Year | Global Inflation Rate (%) | Advanced Economies Inflation Rate (%) | Emerging Market and Developing Economies Inflation Rate (%) |
---|---|---|---|
2019 | 3.5 | 1.4 | 5.1 |
2020 | 3.2 | 0.7 | 5.2 |
2021 | 4.7 | 3.1 | 5.9 |
2022 | 8.7 | 7.3 | 9.8 |
2023 | 6.8 | 4.6 | 8.3 |
2024 | 5.9 | 2.6 | 8.3 |
2025 | 4.5 | 2.0 | 6.2 |
2026 | 3.7 | 2.0 | 4.9 |
After hitting a peak of 8.7% in 2022, global inflation is projected to fall to 5.9% in 2024, reflecting promising inflation trends amid resilient global growth.
While inflation has largely declined due to falling energy and goods prices, persistently high services inflation poses challenges to mitigating price pressures. In addition, the IMF highlights the potential risk of an escalating conflict in the Middle East, which could lead to energy price shocks and higher shipping costs.
These developments could negatively affect inflation scenarios and prompt central banks to adopt tighter monetary policies. Overall, by 2026, global inflation is anticipated to decline to 3.7%—still notably above the 2% target set by several major economies.
Adding to this, we can see divergences in the path of inflation between advanced and emerging economies. While affluent nations are forecast to see inflation edge closer to the 2% target by 2026, emerging economies are projected to have inflation rates reach 4.9%—falling closer to their pre-pandemic averages.
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