The sharp increase in Canadian equity trading from 2006-2007 did not benefit all players equally, according to a new study from Greenwich Associates.

The report finds that electronic trading held firm, commission rates declined, buy-side analyst hiring declined, and soft dollar use is steadying.

Greenwich says that Canadian institutions paid an estimated $790 million in commissions on equity trades for 2006-2007, a significant increase from 2005-2006. Amid this increasingly active market, it finds that Canada’s institutional investors put on hold some strategic shifts undertaken in prior years.

In last year’s study, Canadian institutions reported that they were preparing for a big move into electronic trading, and they were hiring research analysts as part of what seemed to be a burgeoning effort to internalize large parts of the research function. In addition, Canadian institutions were cutting back on their use of soft dollars while increasing the amount of hard dollars spent on broker research and other services.

The 2007 data shows a decided pause on almost all these key fronts, Greenwich reports. “It is not surprising that institutions appear to have put off some major changes to their businesses, because the Canadian equities market is very much a market in transition,” says Greenwich Associates consultant Lea Hansen. “Stepping back to watch how market dynamics and regulation play out, both domestically and in the United States and other countries, might in the end prove a very sound strategy.”

The typical Canadian institution directed less than a quarter of its overall equity trading volume to electronic and portfolio trading systems between 2006 and 2007, virtually unchanged from a year ago, it notes. Included in that amount was about 12% of total trade volume executed through self-directed electronic trades — with or without algorithms — and 10% executed through portfolio trades. The typical U.S. institution executed a full 37% of its equity trades via electronic and portfolio trading in 2007, up from 33% the prior year. Despite the pause in Canada this year, institutions expect to match the 37% of equity trading business currently executed though electronic and portfolio trades in the US within three years, Greenwich says.