Incumbent stock exchanges have a responsibility to share more data to attract investors, protect liquidity and stimulate competition, according to the CEO of a Canadian exchange.
Speaking to The TRADE, Jos Schmitt, president and CEO of Aequitas, said some exchanges have been guilty of operating a “monopolistic” data policy which could be detrimental to their own business models.
Schmitt’s words come after Aequitas launched an official complaint with the Competition Bureau of Canada, accusing TMX of anti-competitive practices and dominating the pricing of market data in Canadian capital markets.
He said: “If you don’t make data about your product and your service widely available, people will be looking at it less and less and you will lose investors.
“Non-domestic investors and capital raising companies will be saying ‘I don’t get the brokers’ exposure that I should get for my product’ and this will negatively impact liquidity and, in the long-term, their whole business.
“Waiting for any regulatory initiatives to take effect before changing the model may be even more detrimental.”
In a white paper, Aequitas proposed a solution for the Canadian market entitled Aequitas CMV Connect, which aims to use investment dealers’ private market data, including order and trade information from investment dealers based on their activity, to produce a consolidated market view (CMV).
In addressing this issue Schmitt expressed a desire for regulators to step in to create a fairer trading environment.
“Securities regulators should step in as looking from an investors perspective, we don’t have an environment that allows traders to achieve their objectives.
“We know there are other types of solutions that can be put in place as was the case in the US a few years ago when multiple markets emerged, regulators put in place a mechanism to manage the situation.
“They may not be perfect but the data is unrestricted and publically listed companies in the US can now benefit from best possible exposure.”
When contacted by The Trade for a response to Aequitas’ initial complaint TMX issued the following statement:
‘TMX operates within applicable laws and we are confident that we fulfil our role within the regulatory framework in Canada that ensures all investors, including retail, receive best execution.
“We charge competitively for market data, commensurate with the value of the products and services TMX provides to clients.”