A second Canadian brokerage firm has inked a deal with StarMine to measure the quality and accuracy of its analysts’ research.

Scotia Capital Inc. announced today that it will use the Web-based StarMine Monitor in combination with internal systems to track analyst performance.

“Adopting an independent, third-party service helps us objectively monitor the quality of our research,” said James McLeod, managing director and head of equity research at Scotia Capital.

Earlier this week BMO Nesbitt Burns Inc. said that it had entered into a similar agreement with San Francisco-based StarMine.

StarMine evaluates analysts by simulating portfolios based on the analyst’s buy/sell/hold recommendations. StarMine’s system makes it possible to fairly compare analysts across industries with disparate sets of stocks covered. Each analyst’s score is calculated relative to the performance and dispersion of a benchmark derived from the analyst’s particular coverage list. To earn a high score, the analyst must differentiate among his or her stocks well – the analyst can’t get a high score simply by the luck of being assigned to a high-flying stock or industry.

Out of the 680 analysts StarMine ranked in its 2002 survey of Canadian research providers, Scotia Capital’s Anthony Zicha, Director of Special Situations Research, ranked second overall in stock picking for his coverage of trading companies and distributors.