The Investment Industry Association of Canada (IIAC) today commented on the market decline of the past month. “Although the markets in the short-term have been more turbulent than usual, this volatility reflects the normal functioning of healthy, expanding capital markets,” says Ian Russell, IIAC president and CEO.

Russell notes that “Since the beginning of 2003 the average value of Canadian stocks, as reflected in the S&P/TSX index, has more than doubled. Since the end of 2005 they have increased by 30%. The Dow has made similar gains. Those numbers include the corrections of the past month. In short, we’re in a period of remarkably strong growth. And no investor should feel unduly concerned about corrections in such a strong market.”

“Economists in our member companies,” Russell notes, “are consistent in emphasizing that the fundamentals remain strong. If this correction leads some investors in the U.S. and Canada to examine more closely their levels of risk, that too is beneficial.”

The IIAC has taken steps to ensure short-term market stability. The association works closely with the Bank of Canada. It has kept the Bank of Canada informed of the industry’s perspective on recent market developments. It has also collaborated with the Canadian Depository for Securities (CDS) on issuing CDS clarification to its participants on its rules and procedures for the clearing and settlement of securities. These changes, which have been welcomed by market participants, facilitate more stable and well-functioning commercial paper markets.

In addition, the IIAC says it is working on longer term initiatives to make Canadian equity markets more efficient. These initiatives will improve regulatory procedures across the country, making them more cost-effective, uniform and transparent.