Canadian alternative trading system (ATS) and dark pool operator Alpha Group has set a date for its debut as a full exchange, marking the venue’s transition from start-up rival to full competitor with incumbent exchange group TMX.
Alpha CEO Jos Schmitt told theTRADEnews.com that the new Alpha exchange will go live on 2 April. The venue received approval from its primary regulator the Ontario Securities Commission (OSC) on 6 December. The launch of the platform is still subject to the agreement of the remaining provincial regulators in Canada. But with the sign-off of the OSC, this is now regarded largely as a formality.
“There are now no major obstacles for our launch as an exchange,” said Schmitt. “We are just making the practical preparations – incorporating the new entity, helping our market participants get signed up and ready and putting the operational arrangements in place.”
Schmitt promised that the new exchange would seek to differentiate itself from TMX by focusing on value for money, clarity and consistency of listings, advising issuers responsibly, listening to issuers’ needs and helping inform and educate the market.
Alpha was established in 2007 by nine Canadian financial institutions. The firm currently operates both a lit ATS and a dark pool, Alpha IntraSpread, which was launched in June. According to Schmitt, the dark pool currently accounts for 2.5-3% of Canadian market share and has an average order size of 800-1,000 shares, which he claims is twice as large as any other platform found in Canada. Figures provided by Thomson Reuters record that on 26 January, Alpha accounted for 14.0% market share in Canada, while TMX held 69.2% and rival ATS Chi-X Canada had 12.1%.
Market participants in Canada have had to live with uncertainty in recent months, as a consortium of 13 Canadian banks and financial institutions operating under the name Maple Group seeks to build an integrated exchange and clearing business by acquiring and uniting TMX Group, Alpha Group and Canadian national securities depository CDS.
Although the deal has been criticised by some observers on the grounds that it could concentrate too large a portion of Canada’s market share in the hands of a single organisation, Schmitt argues that it could create savings for market participants. Pointing to what he believes is the relative success of foreign integrated exchanges such as Hong Kong Exchanges and Clearing, he characterised the Maple deal as a once in a lifetime opportunity that should be seized before it is too late.
“The market integration that it offers should result in cost synergies, for example between equities and derivatives clearing,” he said. “This deal would bring together different market segments – our participant base is more retail-focused, while TMX is leaning more towards high-frequency trading. Those elements are complementary and bringing them together would create real benefits in terms of market liquidity and trading opportunities for all participants.”
Canadian regulators are currently reviewing the proposed Maple acquisition of TMX, with a final decision from the country’s provincial regulators in Ontario, Quebec, Alberta and British Colombia expected by Q2. However the deal remains uncertain, following reports in December that the country’s Competition Bureau had voiced serious concerns about the deal on the grounds that it could give too much power to TMX.