Bay Street dominates Canada’s financial industry, but Toronto may be perceived as a regional financial centre in other parts of the world, due to the role of its securities sector, according to a new report from the Conference Board of Canada.
The report, Ensuring the future: Understanding the importance of Toronto’s financial services sector, examines the economic importance of the financial sector in Toronto to the local economy, the national economy and the world. The report finds that in 2012 the sector employed 229,380 people directly in Toronto, and supported 191,210 indirect jobs across Canada. Employment has risen by 25% since 2002, it says, accounting for one of every 13 jobs in the region. And, in terms of gross domestic product (GDP), the sector is the city’s second-largest, behind manufacturing.
The industry accounts for 7.6% of the metro area’s employment, which is the highest share among all of Canada’s metro areas, and higher than the share in other major global financial centres, such as New York and London, the report notes.
Within Canada, Toronto is far and away the biggest player, accounting for 29.3% of national financial services sector employment in 2012. Montreal was a distant second at 12%, the report says.
As well, Toronto accounts for over 40% of Canadian employment in industries such as asset management, back office operations, and exchanges.
However, in a global context, Toronto is a second-tier financial centre. The report says that some people perceive Toronto’s financial services sector to be more of a regional player than a global player. “Much of this perception may be driven by Toronto’s securities industry,” it notes. “Its importance in Toronto is smaller than that in some other major global financial centres, and foreign companies play a much larger role in this industry than in any of the others in Toronto’s financial sector.”
“Add the fact that securities is a more internationally focused portion of the broader financial sector, and that it is a ‘marquee’ industry due to the very high wages it pays, and one can see how perceptions of this one industry may be erroneously applied to the sector as a whole,” the report adds.