Desjardins Capital Markets has joined the investment dealers of Canada’s Big Six banks as a top tier player in the Canadian fixed-income markets, reports Greenwich Associates.

In a new report, Greenwich says that for the past several years its annual fixed-income survey has shown Desjardins increasing its market share beyond its base in Quebec, while some of its leading competitors lost ground. And, it now concludes, “It’s official: The Canadian Big Six are now the Big Seven”, as Desjardins has joined the country’s top dealers in the fixed-income space.

The survey finds that aggregate fixed-income trading volume (including interest rate derivatives, structured credit derivatives and excluding money markets), decreased by approximately 7% in the past year. RBC Capital Markets remains the leader in Canadian fixed-income trading with a market share of 16.7%, followed by TD Securities at 13.2%, and Scotia Capital Markets at 12.3%. BMO Capital Markets and Desjardins round out the top five.

At the same time, Greenwich notes that a number of foreign banks are pulling back from the Canadian market. “Driven largely by the impact of new regulations, capital requirements and low volatility, several global firms are scaling back their Toronto-based fixed-income sales force and servicing clients back in New York,” it says.

“It’s a continuous cycle: If someone catches a cold in New York or London, they pull out of Canada,” says Peter Kane, consultant with Greenwich Associates. “Capital requirements, personnel costs and low volatility have exacerbated the situation. Deployment of capital, overhead costs and fierce local competition are a continual management balancing act, and for the global banks, the best returns are often found outside Canada.”

The survey also reports that electronic trading continued to build momentum in the fixed-income space. Total volume executed over electronic systems — mainly through the CanDeal platform — increased 20% from 2013 to 2014, and electronically executed transactions now account for 48% of all Canadian fixed-income trading volume, up from 44% in 2013, Greenwich reports.