UBS has launched algorithmic trading for clients dealing in equities dual-listed on Canadian and US exchanges, enabling users to settle in the currency of their choice.
Orders are managed through UBS's own proprietary cross-border consolidated order book. The new technology is designed to post and track volumes in both markets simultaneously. The firm hopes this will significantly reduce the risks of opportunity cost and negative selection.
Users will see an aggregated, weighted view of a symbol's global liquidity instead of two separate country-centric views, a feature which is designed to improve transparency and accuracy, allowing better placement of orders. UBS expects that clients will be able to access between 20-80% more liquidity in inter-listed names, without having to deal with complex settlement procedures. US-based clients will be able to access 12 algorithmic strategies, Canadian clients currently only have access to seven.
Agency broker Instinet recently completed the rollout of its electronic trading platform in Canada, including a US-Canadian inter-listed smart order router, which simultaneously works an order for dual-listed stocks on both Canadian and US trading venues to find the optimal execution price and facilitate single currency settlement.
“The trading volume on Canadian and US exchanges of inter-listed stocks can reach into the billions of shares daily,” said Rick Meslin, CEO of UBS Securities Canada and head of Canadian equities. “With these volumes driving potential cost savings to clients it was imperative for us in this age of ”Algo 2.0' to build a better mouse trap. And we have.”