Agency broker Instinet has begun the regulatory filing process for launching a dark alternative trading system (ATS) in Canada, in addition to enhancing its electronic execution offering in the country.
Instinet Canada Cross (ICX) is expected to launch within the next six months and will consist of two dark pools: a pre-market, volume-weighted average price (VWAP) cross and Instinet BLX.
BLX, which has been offered in the US since November 2009, is an algo-friendly dark pool that seeks to build block trades by combining the liquidity aggregation benefits of point-in-time crossing with the flexibility of a continuous market.
Rival Canadian exchange group TMX, which owns the Toronto Stock Exchange, also plans to launch a displayed ATS in 2011, suggesting that exchange competition in the region is beginning to heat up. Other ATS operators Alpha, Chi-X Canada and Omega ATS had market shares of 17%, 11% and 0.6% respectively as of November 2010, according to Thomson Reuters.
Instinet has also completed the rollout of its electronic trading platform in Canada, which now includes a US/Canadian inter-listed smart order router, its Execution Experts suite of event-driven algorithmic trading strategies, and improvements to the firm's Newport 3 execution management system.
In Canada, the Execution Experts algo suite is composed of a range of benchmark, participation and liquidity sourcing strategies with inter-listed capabilities. All the algos leverage Instinet's recently launched inter-listed smart order router, which will simultaneously work an order for dual-listed stocks on both Canadian and US exchanges, displayed ATSs, electronic communications networks and dark pools to find the optimal execution price. The price is based on real-time foreign exchange rates, allowing for single currency settlement.
“The Canadian equity markets have rapidly evolved over the last several years and today demand sophisticated trading technologies on a par with those required in other leading global markets,” said Jonathan Kellner, president of the Americas at Instinet.
For users of Newport 3, Instinet enabled direct access to the algo suites of nine Canadian brokers' in H2 2010. Users can now access Instinet's entire global product portfolio, as well as dozens of other brokers' solutions, bringing the total number of algorithmic broker offerings in Canada to more than 20.
Instinet complemented its Canadian expansion last year with the hiring of three experienced electronic trading professionals, including Alison Crosthwait as director of global trading research, and Jeff Houslander and Andrew Hill to the firm's Canadian trading desk.
Goldman Sachs also recently released a clutch of algorithmic strategies in Canada in January 2011, including algos that tap into ”grey' liquidity – defined as hidden liquidity on a public marketplace.