Foreword

View the most recent version.

About the figures

The series on international security transactions cover portfolio transactions in stocks, bonds and money market securities between non-residents and residents of Canada. The series include trade in outstanding issues, new issues, retirements, and change in interest payable and are further segmented by issuing sector and major geographic area. The principle guiding their construction is that a change of ownership occurs between residents of a foreign country and Canada. These series form an integral part of Canada's balance of payments. Certain types of security transactions, which are excluded from this publication, are classified to other balance of payments series as follows:

1. security transactions representing direct investment capital by principal owners of an enterprise, e.g. parent companies subscribing to new stocks;
2. foreign securities held as part of Canada's official international reserves or by Canadian banks for their own account;

Security transactions are recorded before charges for fees and commissions. The value used is the transaction price and the timing of a transaction's recording is generally the delivery or settlement date.

The quality of foreign portfolio investment data in Canadian stocks, bonds and money market paper is good. The flows are reported on a monthly survey sent to the major investment dealers, pension funds, and the largest debt issuing institutions such as the provinces and their enterprises. Historically, the response rate has been well over 90%. A considerable effort is made to identify the various sectors and institutions which issue securities to nonresidents; the data may, at times, be revised when new transactors are identified or information becomes available through annual surveys. The coverage is validated against administrative data and the annual census survey of foreign holdings of Canadian portfolio investments.

The quality of estimates of Canadian investment in foreign stocks, bonds, and money market paper is not as good as it is difficult to identify all Canadian residents making portfolio investments abroad. A considerable effort is made to identify the various Canadian institutions which invest in foreign securities and survey them on a monthly basis however individuals in the personal sector using foreign investment firms are harder to identify thereby weakening the estimates. The quality of the data has improved significantly with a series of annual surveys on Canadian portfolio investment abroad that began at year-end 1997. The inaugural survey was carried out as part of an international effort to improve data on external portfolio investment. Fully 35 countries participated in the portfolio survey, co-ordinated by the International Monetary Fund.

For transactions in outstanding securities, the data are largely derived from a monthly survey of investment dealers and of other financial institutions such as mutual funds, pension funds and trust companies which regularly buy or sell securities directly through dealers or brokers outside Canada. The data for new issues and retirements are obtained from survey and non-survey sources such as prospectuses, summaries prepared by dealers and other institutions, press reports, etc.

For a fuller description of the sources and methods employed in the construction of these series, please refer to the free publication Canada's Balance of International Payments and International Investment Position - Concepts, Sources, Methods and Products (Catalogue no. 67-506-X).