May the Best Venue Win
The Labor Day holiday in the US and the end of summer leave me wishing there were time for a few more beach trips. But duty calls—namely to deliver this column to you in Rob Daly's stead this week and next.
While many on both sides of the US–Canada border may have been at the beach last month, the Investment Industry Regulatory Organization of Canada (IIROC) on Aug. 13 asked major brokerages to explain their participation in the Momentum Initiative, a program of the Alpha Group alternative trading system (ATS), the largest such competitor of the Toronto Stock Exchange (TSX). Alpha's initiative asked its backers, which include the major Canadian banks, to switch orders from the TSX to Alpha to make Alpha a busier market.
Orders switched to Alpha at the market open, in particular, drew the IIROC's attention since if those orders are filled at a worse price than what is available on the TSX, participants may be put at a disadvantage.
Alpha CEO Jos Schmitt says he is baffled by IIROC's singling out of the Momentum Initiative. "Is there anything specifically that needs to be done around the fact that [the marketplace] has multiple prices?" he says. "The Momentum Initiative tries to push liquidity to Alpha, but always with full respect for best prices and best execution principles. The Momentum Initiative directs orders to one place versus another. That is driven fundamentally by fees, service and quality of execution. Alpha scores extremely high in these areas."
So far, IIROC's action on the Momentum Initiative has been confined to its inquiry to brokers. Some Canadian brokers say the rules for pre-market routing of orders leave room for interpretation. Even if that isn't the case, the contention that the Momentum Initiative subverts free and fair competition doesn't hold water. If Alpha's competitors have a problem with it, all they have to do is come up with better service, lower fees and more desirable prices for the securities themselves.
"It's not very complex to understand what the benefit is of directing orders to Alpha,” Schmitt acknowledges. “But that will always be subject to two main conditions: best price and best execution." He says he has been asking for guidance from regulators on the multiple opening prices issue since summer 2009.
So even as the weather cools, debate over fair market open pricing in Canadian markets is sure to heat up.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Nasdaq to market new options strike listing tech to other exchanges
The exchange operator is experimenting with emerging technologies to determine which options strike prices belong in a crowded market, with hopes to sell the tech to its peers.
The IMD Wrap: Talk about ‘live’ data, NAFIS 2024 is here
This year’s North American Financial Information Summit takes place this week, with an expanded agenda. Max highlights some of the must-attend sessions and new topics. But first, a history lesson...
MarketAxess builds strategy around X-Pro
MarketAxess profits were down in Q1, but revenues were up and automation volume hit a record $94 billion.
Canada’s triparty repo launch aims to fill C$60bn void
Test trades on TMX/Clearstream platform represent “quantum leap” for creaking funding markets.
People Moves: NorQuant, Tradition, Duco, HKEx, SimCorp, Hazeltree, Xceptor, Broadridge, and more
A look at the past month’s people moves in the capital markets technology and data space.
Bank-led consortium takes aim at position reporting
Five banks, including Barclays, BNP Paribas, Goldman Sachs and HSBC, have joined forces to mitigate interpretation and implementation errors in position reporting disclosures.
This Week: BBH, AllianceBernstein add data solutions, Deutsche Börse-Nodal Exchange, and more
A summary of some of the latest financial technology news.
Consortium backs BGC’s effort to challenge CME
Banks and market makers—including BofA, Citi, Goldman, Jump and Tower—will have a 26% stake in FMX.
Most read
- Waters Wavelength Podcast: Bloomberg’s Tony McManus
- IMD & IRD Awards 2024: All the winners
- Waters Wavelength Podcast: S&P’s CTO on AI, data, and the future of datacenters