Canada's International Transactions in Securities

Status:
Active
Frequency:
Monthly
Record number:
1535

The series on international security transactions covers portfolio transactions in stocks, bonds, and money market securities between non-residents and residents of Canada.

Detailed information for October 2014

Data release - December 16, 2014

Description

The series on international security transactions covers 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 geographical 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 monthly program, are classified to other balance of payments series as follows:

- international security transactions representing direct investment capital by the principal owners of an enterprise, e.g. parent companies subscribing to new stocks of their foreign subsidiaries;

- foreign securities held as part of Canada's official international reserves or by Canadian banks for their own account--those transactions are part of other investment assets;

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 settlement or delivery date.

Statistical activity

The Canadian System of National Accounts (CSNA) provides a conceptually integrated framework of statistics for studying the state and behaviour of the Canadian economy. The accounts are centered on the measurement of activities associated with production of goods and services, the sales of goods and services in final markets, the supporting financial transactions, and the resulting wealth positions.

To produce financial statistics, the CSNA measures the economic dimensions of the public sector of Canada, including the financial inter-relationships among the thousands of entities that make up the three levels of government in Canada (federal, provincial and territorial, and local). In order to carry out this program, the CSNA maintains a universe of all public sector entities including their complex inter-relationships.

The Non-resident Sector Program is a component of the Canadian System of National Accounts (CSNA). The linkage is possible because the standards and conventions used to establish the Canadian residency of the transactors and to compile the transactions of Canadian residents with non-residents are identical to those used in the CSNA.

Subjects

  • Balance of international payments
  • Economic accounts
  • Government financial statistics

Data sources and methodology

Target population

The universe for the international transactions in securities includes all transactors who reside in Canada who buy or sell foreign securities, as well as transactors who reside outside of Canada who buy or sell Canadian securities. The transactors can be businesses, governments, non-profit institutions, households or persons.

In general, it is much more practical to collect these data from the intermediaries who act as brokers or agents for those trading securities, rather than trying to collect the data from the transactors themselves who are ultimately buying or selling the securities. Further streamlining of collection effort is gained by requesting data from companies that perform data processing services on behalf of several intermediaries. There are two such data processing firms that supply data for approximately twenty of the largest intermediaries.

In some cases, however, the purchaser or seller engages in these transactions for their own account, without going through an intermediary. These transactors, which include large institutional investors such as pension funds, are directly surveyed.

The series on foreign portfolio investment in Canadian securities are reported in a monthly survey sent to the major investment dealers, pension funds, and the largest debt issuing institutions such as the provinces and their enterprises.

A considerable effort is made to identify the various Canadian institutions which invest in foreign securities and survey them on a monthly basis.

Instrument design

The following questionnaires are used to collect data for compiling Canada's international transactions in securities:

BP30 - Canada's international transactions in securities (monthly)
BP30A - Sales of short-term securities to non-residents of Canada (monthly)
BP30B - Purchases of short-term securities from non-residents of Canada (monthly)
BP30Q - Canada's international transactions in securities (quarterly)

The questionnaires used for the international transactions in securities were designed in the 1950's with minor modifications implemented up to the present.

Sampling

Data are requested from transactors who are known to engage in international portfolio investment transactions, or in some cases from the intermediaries who act on their behalf, or in other cases from firms who process data on behalf of intermediaries.

For those transactors who trade for their own account, and thus are surveyed directly, the very large transactors are surveyed on a monthly basis. There are approximately 25 such transactors and another 15 transactors who trade for their own account, but on a smaller scale, and these are surveyed directly on a quarterly basis.

There are 55 investment intermediaries who are surveyed, and there are two data processing firms that provide data for an additional twenty intermediaries.

These surveys are believed to cover close to 100% of the target population on a quarterly basis, with 87% of the target population covered on a monthly basis.

Data sources

Responding to this survey is mandatory.

Data are collected directly from survey respondents.

Data are collected partly through monthly questionnaires, partly through monthly submission of electronic files, and partly through quarterly questionnaires.

Monthly questionnaires are sent out on the last business day of the month. Respondents are instructed to send their completed questionnaires to the Balance of Payments Division within 3 weeks after the end of the month. The follow-up is entirely conducted by telephone by the subject-matter analyst. This fosters good will and assists in keeping an updated list of contacts at the surveyed firms.

There are about 100 respondents, representing over 95% of transaction values, who provide data on a monthly basis, while the remaining 15 respondents provide data on a quarterly basis.

Twenty-five respondents, representing more than 80% of transaction values, provide data in electronic format whereas the remaining 90 respondents fill out paper questionnaires.

View the Questionnaire(s) and reporting guide(s).

Error detection

The raw data received from respondents are submitted to edits to ensure consistency and coherence. This includes verifying that detailed transactions add up to totals provided, ensuring geographical and currency codes are valid, and removal of transactions that are included due to an incorrect assignment of country of residence. The volume and value of transactions for each respondent is compared to their historical levels and any dubious high or low volumes or values are identified. When necessary, there is follow up with the respondent to verify and if necessary correct the data.

Imputation

In the case of non-response, both purchases and sales of securities are imputed using equal values by type of security (foreign / Canadian, debt / equity). The result of this type of imputation is that gross sales and gross purchases are both increased, but the net international flow of securities for the imputed respondent is zero. The level of sales and purchases for imputation is chosen by analysing the respondent's historical trend.

Estimation

Some respondents are surveyed on a quarterly basis only. Monthly values for these respondents are estimated by dividing the most recent quarterly data by three.

Macro adjustments are sometimes made where the data suggest that some transactions may have been missed. Macro adjustments are also made for new issues and retirements. In the case of retirements, the data generated by the system does not include calls by the issuer which frequently occur when interest rates decline.

Quality evaluation

Coverage of foreign portfolio investment in Canada is validated against administrative data and the annual census survey of foreign holdings of Canadian portfolio investments. The former refers to a government of Canada document that lists all securities issued, while the latter refers to data collected with the annual BP-52 questionnaire (Geographical distribution of capital) which feeds into Canada's International Investment Position (record no. 1537).

Coverage of Canadian portfolio investment abroad is validated against the annual BP-54 questionnaire (Canadian portfolio investment) which feeds into Canada's International Investment Position (record no. 1537).

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Revisions and seasonal adjustment

Monthly published data for the current year are open for revision starting February of the current year and extending to February of the following year. Each year, with the publication of March's data, revisions are made extending back 4 years.

This is in line with the revision policy of the Canadian Systems of National Accounts (CSNA). Each year, the most current four years of CSNA data are subject to revision. Revision of data beyond that does not occur until the next historical revision as dictated by the CSNA. As a result, breaks in series are sometimes inevitable and footnotes are provided to warn the data user of any issues.

There is no seasonal adjustment of the international transactions in securities data.

Data accuracy

Non-sampling errors - While considerable effort is made to ensure high standards throughout all stages of collection and processing, the resulting estimates are inevitably subject to a certain degree of non-sampling error. Examples of non-sampling error are coverage error, data response error, non-response error and processing error.

Coverage error can result from incomplete listing and inadequate coverage of the population of Canadian transactors that engage in international transactions. Coverage of foreign portfolio investment in Canada is validated against administrative data and the annual census survey of foreign holdings of Canadian portfolio securities. The former refers to a government of Canada document that lists all securities issued, while the latter refers to data collected with the annual BP-52 questionnaire (Geographical distribution of capital) which feeds into Canada's International Investment Position (record no. 1537).

The coverage 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. It is more difficult, however, to identify individuals in the personal sector who use foreign investment dealers.

Data response error may be due to questionnaire design, the characteristics of a question, inability or unwillingness of the respondent to provide correct information, misinterpretation of the questions or definitional problems.

Non-response error is related to respondents that may refuse to answer, are unable to respond or are too late in reporting. In these cases, data are imputed. The extent of any imputation error decreases with increases in the response rate and attempts are therefore made to obtain as high a response rate as possible. The response rate for the monthly questionnaires is excellent, being consistently over 90%.

Processing error may occur at various stages of processing such as data entry, editing and tabulation. Measures have been taken to minimize these errors. Data entry and edit are performed simultaneously due to the spreadsheet design which allows errors to be quickly seen. Historical ratios also aid in eliminating outliers created by data entry. Tabulation is automated to eliminate human error.