Canadian trading platform provider TMX Group is to introduce new on-book non-displayed order types on the Toronto Stock Exchange (TSX) and public venture capital marketplace TSX Venture Exchange.
The dark orders will be fully integrated into the existing book on each exchange, meaning the new non-displayed orders will interact and trade with visible as well as other non-displayed orders.
The two new order types are non-displayed mid-point orders, which are designed to execute at the Canadian Best Bid/Offer (CBBO) mid-point price with an optional limit price, and non-displayed limit priced orders, which trade at their limit price or better, but the exchanges can automatically adjust the book price to protect against trade through.
“Integrating non-displayed liquidity with Canada's most extensive displayed order book in a manner that preserves the fairness and integrity of the market provides tremendous benefits to all market participants, regardless of their size and trading strategy,” said Kevin Cowan, president, TSX markets and group head of equities. “Our two new dark order types will also offer customers additional trade execution choices and important liquidity-seeking opportunities.”
Non-displayed orders will execute only after all TSX/TSXV visible and iceberg orders at the same price have been executed, ensuring that the quality of the visible market is maintained. The TSX/TSXV non-displayed order types will be released into the customer test environment in November 2010.
Industry observers have welcomed the move, citing the widespread use of similar order types in US markets as proof of their value.
“It's a natural progression that the TSX would add these mid-point and dark order types,” commented Beth Haines, vice president, sales, at alternative trading system Chi-X Canada. “Mid-point pegging offers sellers price improvement advantages. It just goes to show that with TMX adding these order types there is a need for them in the Canadian marketplace.”
Fully hidden order types have been available on Chi-X Canada since March 2008.