A new Canadian alternative trading system (ATS) operated by Chi-X Canada will launch on Friday 3 May following recent regulatory approval, but details on its pricing model remain unknown.
Chi-X Canada’s new CX2 ATS will launch in phases, initially trading in a subset of securities listed on the Toronto Stock Exchange and TSX Venture Exchange, before all securities on those venues will be traded.
The ATS will attempt to carve out market share through a unique pricing model, details of which will be released before its launch, according to Dan Kessous, CEO, Chi-X Canada, who spoke to theTRADEnews.com last year.
“CX2 will have a different pricing model that will attract an under-served segment of the market. We plan to announce CX2 pricing prior to launch,” Kessous said.
CX2 may look to reward active liquidity takers, rather than liquidity providers, to attract participants accustomed to paying fees to take liquidity on other Canadian venues.
Whether the structure adopted is a formal taker-maker model, or simply offer rebates for liquidity takers, it will likely be designed to help CX2 challenge lower-cost trading venues such as Omega and Select.
Approval from the Ontario Securities Commission was given with changes to broker preferencing and execution of iceberg orders. CX2 will not be allowed to preference brokers on anonymous orders and all attributed orders will be mandated for broker preferencing, removing an opt-out function from the venue’s original plans.
These changes were made after industry consultations within Canada, while the Investment Industry Regulatory Organization of Canada also gave its approval.
In January, Chi-X Canada retained its lead as the biggest alternative venue in Canada, with a 19.2% share of overall equity trading. Alpha Trading, which was the largest alternate platform until October last year, held second place with 16.9%.