Canadian venues compete to provide market access

Access to Canadian equity and debt markets is being made easier through technology-led initiatives from Omega ATS and exchange group TMX.
By None

Access to Canadian equity and debt markets is being made easier through technology-led initiatives from Omega ATS and exchange group TMX.

Alternative trading system (ATS) Omega ATS is providing access to liquid fixed income securities, beginning with select government issued bonds, via a visible auction market for the first time. The market should increase transparency in the country's bond trading space – a market which has generally not been subject to the same transparency and best execution regulations to which other instruments must comply.

“Our objective is to provide visibility on prices to equip investors with the knowledge to make better investment decisions,” said Mike Bignell, president of Omega ATS. “As the first to offer full transparency of OTC traded fixed income instruments, we will forever change the landscape for the common investor to a setting that promotes equal and open access.”

Bignell explained that fixed income trading has previously been a largely OTC area in Canada, with no obligation to trade on a lit market. The two existing venues for the trading of fixed income securities were CBID and CanDeal, ATSs that trade at an institutional level. However he asserts this means retail investors have been largely excluded from the market, due to the cost of connection and the large scale of trading offered, which is not ideal for smaller investors.

Meanwhile TMX has introduced a single point of access to Canadian equity markets, using its existing Smart Order Router Automated Jitney service (SORAJ) available via its Toronto Stock Exchange (TSX) and TSX Venture Exchange trading venues.

The new service is being offered by member brokers to clients and allows them to automatically reach all Canadian marketplaces to enable best execution, using routing algorithms. Service subscribers who do not have a membership to all marketplaces can use the membership of a participating SORAJ provider to execute their orders, thus eliminating the cost of maintaining multiple marketplace memberships.

Kevin Cowan, president of TSX markets and group head of equities, said the solution was designed to help market participants battle the costs associated with market fragmentation, while meeting regulatory best price obligations.

“One of the key challenges our clients face today is to control trading costs in a multi-market environment,” said Ted George, director of trading, Fidelity Clearing Canada. “This solution allows our clients to seamlessly access liquidity across all marketplaces and reap the benefits of competing quotes and structures while limiting the fixed cost burden associated with individual membership.”

TMX intends to launch its own alternative trading system for equities, TMX Select, to regain market share previously lost to venues such as Chi-X Canada and Omega ATS. The new venue is expected to go live in Q2 2011.