The pricing model for a new Chi-X Canada alternative trading system will attract an under-served portion of the market, while it’s launch was delayed until Q2.
CX2 was slated for a Q1 launch but has been pushed back because approval from the Ontario Securities Commission has not yet come through. Approval is expected later this month.
Speaking to theTRADEnews.com, Chi-X Canada CEO Dan Kessous said the new venue was designed to carve out market share with a unique pricing model, details of which would be released in coming months.
“Pending regulatory approval, we are planning to launch CX2 at the beginning of Q2,” Kessous said. “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.”
One option available to CX2 would be 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 seems it will clearly be designed to help CX2 challenge lower-cost trading venues such as Omega and Select.
Chi-X Canada, the firm’s main venue, has expanded its market share of Canadian equities trading, with year-on-year figures for December trading jumping to 19.6% in 2012 from 11.6% in 2011. Its highest month to date was November, when it garnered 20.1% market share.
In October, new rules governing dark trading in Canada came into effect, causing a drop off in dark trading, although no visible gains in equities trading resulted from the rules.
The regulations require dark orders under 5,000 shares, or C$100,000 in value, to offer a full tick of price improvement, or half a tick for stocks with a one tick spread. The rules also forced venues trading lit and dark orders to prioritise lit orders.