portfolios. these changes in strategy are especially evident in the corporate bond space. some buy - side participants also told us that they were willing to provide liquidity by acting in a countercyclical fashion to take advantage of market distortions caused by temporary illiquidity in certain markets. the survey results are providing cfif with a foundation for further work in areas where improvements in market functions may be made. discussions at cfif meetings are also inspiring new areas of research. last year, members commented on the increased use of canadian bond futures for hedging by the dealers. in analyzing the data, we noted an increased level of participation by high - frequency traders in this space. in response, we undertook a study of hft in the government of canada bond futures market. we used data provided by the montreal exchange to understand the impact of hft on market functioning. 11 our analysis showed that its average effect on market pricing was slightly positive. both effective and bid - ask spreads, as well as price volatility, declined, while the average depth of the market increased. hft had a small beneficial impact on the all - in cost of the execution of smaller trades. however, no effect was found on the cost of execution for larger trades ( greater than $ 10 million ). it was also clear from the data that many participants now split their trades into smaller blocks, something we have been hearing through cfif and in discussions with market participants across a range of asset classes. so what ’ s on our horizon these days? as we outlined in the recent fsr, changes in mortgage rules late last year have led to important shifts in mortgage activity. because of significant growth in house prices in some of canada ’ s largest cities, we have seen an important increase in the uninsured mortgage space. this has highlighted the potential need for market participants to develop additional sources of funding, particularly for the smaller lenders in this market. 12 to diversify funding sources, one solution would be the development of a private mortgage securitization market. this option has come up in several of our recent conversations. if poorly structured, securitization markets can have significant vulnerabilities. 13 however, if appropriately developed, private - label securitization could benefit the economy by helping lenders fund assets while broadening available collateral to promote market functioning. we will continue to monitor developments in this space. another initiative we are working on is a new systemic risk survey that we

lynn patterson : markets calling - intelligence gathering at the bank of canada remarks by ms lynn patterson, deputy governor of the bank of canada, to the calgary chartered financial analyst ( cfa ) society, calgary, alberta, 28 june 2017. * * * i would like to thank scott kinnear and harri vikstedt for their help in preparing this speech. introduction good afternoon. thank you for that kind introduction. as participants in today ’ s marketplace, you are likely experiencing how quickly technology and markets are evolving. and i can relate. the changes that i saw during my years in fixed - income and equity markets were remarkable. shortly before i began working in fixed - income markets, if you wanted to sell a bond, you would make a phone call and follow up with a teletype message with all the details. then, someone in your back office would physically descend into a vault to pull the bond and have it delivered to the buyer by hand. imagine how sluggish that process would seem to today ’ s traders who transact and settle securities worth millions of dollars with a couple of taps on the keyboard. the shifts in market function and participation that we are seeing globally today are as dramatic. some stem from central bank actions in certain jurisdictions, such as quantitative easing and negative interest rates. others are the result of regulatory reform, new technologies and investor preferences. think, for example, of the influx of investors in the commodity space using indexed and exchange - traded funds ( etfs ). or how high - frequency trading ( hft ) firms are compressing bid - ask spreads in the futures and equity markets. or the development in canada and globally of central counterparties for over - the - counter ( otc ) derivatives and repos. keeping up to date on new trading practices and how the markets are functioning is important to the bank of canada. our mandate is to “ promote the economic and financial welfare of canada. ” 1 so we closely monitor the vigour and health of the financial system. my responsibilities at the bank include the oversight of our activities in financial markets. this includes market intelligence, which is my topic today. now market intelligence can take many different forms, including — in its broadest sense — the macroeconomic insights we gain from talking face to face with businesses operating in the real economy. this includes the important work done by our regional teams on a quarterly basis for our business outlook survey. i can ’ t emphasize enough how critical these real - time