After operating for almost a century exclusively in the U.S., R.J. O’Brien & Associates has finally made a run for the border.

The Chicago-based firm, which is the largest independent futures brokerage south of the 49th parallel, has opened up its first office in Canada. The Canadian operation is known as R.J. O’Brien & Associates Canada Inc. and it is based in Winnipeg.

Robert Dzisiak, president and CEO of RJO Canada, says the parent company didn’t simply throw a dart at a Canadian map in choosing its location.

“Winnipeg has a long history in the futures business,” he explains. “There’s a huge, underserved market in Western Canada, which is commercial agriculture. Hedging and risk-management services, that’s the niche of the firm. The farm size in Western Canada is getting larger.

“We are ready to begin building our client base here,” he adds. “And we are committed to meeting the risk-management and investment needs of institutional, individual and commercial Canadian clients.”

The fact that Winnipeg serves a similar market as Chicago — the city in which the parent company was founded in 1914 — was another reason for the decision, he says.

“We’re a Midwest firm. We have the same values. That makes a big difference when you’re trying to build out an operation,” he says, noting that RJO Canada began working on the process of becoming an Investment Industry Regulatory Organization of Canada member last June.

“Winnipeg is also a low-cost place to operate. There’s access to a lot of industry-trained people here,” Dzisiak says. “It’s easy for travelling, too. It’s two hours to Vancouver or two hours to Toronto.”

The corporate parent is a futures commission merchant that focuses on the execution of futures contracts, including the buying and selling of wheat futures. It clears for several large markets in the U.S. and has access to markets around the world.

“The expertise of the firm relates to risk management and trade execution,” Dzisiak says. “The focus we’re going to have is building out risk-management services to commercial agriculture enterprises across Canada. We do speculative trading as well.”

Dzisiak has extensive experience in the futures industry in Canada, having started and operated the Canadian operation of several major futures brokerage firms — including the Canadian Futures Group, which grew into an operation with 10 offices and 60 brokers before it was sold in 2004. He also has served as chairman of the Winnipeg Commodity Exchange from 2002 to 2003. He has also worked in Toronto and Vancouver as a venture capitalist.

RJO Canada received regulatory approval in early February and, Dzisiak says, it is currently seeking registration right across the country. The Winnipeg office has five people right now, but he expects to see that number grow to at least a dozen in the coming months.

“We have key personnel in various places in Canada,” he says, “who will be joining us shortly.”

Dzisiak, a native Manitoban, says he’s confident RJO Canada will do well in its new home.

“I’ve done this twice before; it’s not something new for me,” he says. “I’m getting back to something I love. I’m a farm boy from Dauphin, [Man.,] and I love Winnipeg. There is a great business opportunity here. I have very high expectations.”

Futures contracts are exchange-traded and are similar to stocks. Their main difference is they’re forward contracts, meaning they expire in different delivery months. They are also highly leveraged.

“You’re taking a position in the market,” Dzisiak explains, “based on either a need to be long or short in the market, or an expectation of where you see the price [of the commodity] being in the future.”

R.J. O’Brien isn’t the only U.S.-based futures firm making a splash in Canada. This past autumn, the retail futures trading division of MF Global Canada Co. was rebranded under the Lind-Waldock name.

Keith Riddoch, Lind-Waldock’s managing director of retail sales, says the rationale behind the change was that the firm wanted to differentiate its institutional services from its retail offering: “Lind-Waldock is a pretty strong name in the U.S., and has been for more than 40 years. We wanted to carry that on in Canada.”

Lind-Waldock trades metals, such as gold and silver, as well as crude oil and currencies.

The company has 40 employees in its Toronto and Montreal offices, including 25 traders. The firm closed its Markham, Ont., office in January. Riddoch says that even though Lind-Waldock is looking to hire more commodities brokers, it does not expect to move into other provinces.

@page_break@“We want to focus on the two major centres; we feel those are the best places to be,” he says. “The majority of the business is done over the phone. Our volumes continue to grow, and we remain a dominant player on almost every exchange on the market.”

Riddoch says that although there are relatively few players in Canada’s commodities-driven futures market, it’s a great niche.

“Canadians,” he says, “know the commodity space better than anybody else.” IE