Daiwa Securities Co Ltd, of Tokyo,plans to open a new Canadian company after a June 30
deregulation of the Ontario equity market is implemented, Daiwa
Securities general manager for Canada Hajimu Watanabe told
Reuters in reply to query.
    The Toronto Stock Exchange earlier announced Daiwa became
the first Japanese company to acquire an exchange seat, paying
361,000 Canadian dlrs, the highest price ever paid.
    "This is a prelude of our establishment of a new Canadian
company," Watanabe said.
    Watanabe said Daiwa's new Canadian brokerage house will
concentrate on investment in Canadian stocks by Japanese
investors, Canadians acquiring Japanese equity, and government
and corporate financing, mainly in the Canadian bond market.
    "We have now a huge amount of demand on the part of Japanese
investors for Canadian stocks," Watanabe said.
    "So if we can get membership of the Toronto Stock Exchange,
that should support our business very much," he added. Daiwa's
application for exchange membership is subject to approval by
other members and the Ontario Securities Commission.
    When asked, Watanabe declined to specify how much capital
Daiwa, the world's second largest investment dealer, would
invest in its Canadian subsidiary.
    "It is quite confidential at this moment, but say our main
intention is not to create any friction with the Canadian
houses," Watanabe said.
    He said Daiwa could easily set up its new unit with one
billion Canadian dlrs of capital, "but we are starting at quite
a moderate figure."
    "But small means quite big in Canadian terms," he added.
    Daiwa, which established a representative office in Canada
in 1980, is ready to open its Canadian house as soon as Ontario
security deregulation is implemented on June 30, Watanabe said,
adding Daiwa is very pleased with its reception by Canadian
regulatory authorities.
    Watanabe said about 10 pct of Japanese investment in
foreign securities goes to Canada, ranking second to the United
States which receives about 50 pct.
    "The Japanese institutional investors feel that it is rather
risky to concentrate around the 50 pct" in one country, he said.
    Japanese institutional investors are trying to diversify to
other non-American vehicles, and there are very few candidates
that remain safe investment objects, Daiwa's Watanabe added.
    Investors in Japan are also feeling it is risky to
concentrate in fixed income paper, and are looking more towards
investment in paper equity and real estate.
   "So, investment in Canadian paper, especially Canadian
equity, should have a great future," Watanabe said.
 Reuter
