Bond trading increased last year following four consecutive years of decline. Government of Canada bonds, by far the largest segment of the fixed income market in Canada, were the major contributor.

According to the Investment Dealers Association of Canada quarterly report Trends in Secondary Debt Trading, which was released today, for all of 2001, trading in Canada bonds reached $3.8 trillion, up 15% from last year and the highest total in three years.

The report suggests that the pickup in bond trading activity was not linked to increased supply. In fact, gross issuance of Canada bonds at $426 billion was the lowest annual total since 1992.

Corporate bond trading established a record all-time high in fourth quarter 2001, finishing at $63 billion, a 29% increase from the previous quarter and a solid 55% jump from the same time last year.

Provincial bond trading also improved in 2001, with fourth quarter results up 8% over the third quarter and 15% over the same time last year, at $80 billion. Trading levels, however, are still off from the record $332 billion set two years ago.

Treasury bill trading activity declined in the fourth quarter while municipal bond trading continued to soar.