Instinet Enters Canada with ICX ATS

NEW YORK—Instinet will move further into the Canadian market next year by launching an alternative trading system (ATS), dubbed ICX, that will compete with the Toronto Stock Exchange (TSX).

"Trade volumes in Canada have risen steadily over the past few years, as institutional investors in the U.S., Europe and Asia have increased their investment in the Canadian marketplace," says Tal Cohen, senior vice president for Instinet's Canada operations.

Instinet has had a brokerage presence in Canada for more than 10 years and has been working to develop and refine this technology over the past year, Cohen says. "We believe that based on this development effort and market climate, the timing is right for Instinet to introduce ICX in Canada," he says.

The new ATS will be based on the same technology and pricing structure that is used by Instinet's Chi-X pan-European ATS, Instinet officials say. ICX will be accessible to its users through the FIX protocol and its market data will be disseminated directly to subscribers and via third-party market-data vendors at no cost.

TSX officials are unfazed by the new market entrant. "Competition is nothing new," says a TSX spokesperson. "We have a great market model, we have a good pricing, great technology and great relationships with participating organizations."

Other off-exchange options include recently launched Canadian offerings from Liquidnet and Pure Trading.

"I don't really see it as competitive because [Instinet] is on the other end of the spectrum from what we're doing," says Robert Young, managing director of Liquidnet Canada and COO of Liquidnet Inc., who says new entrants will improve market awareness, competition and adoption."We find it very easy to wish [Instinet] well," he says.

Canada is a "challenging environment" in terms of getting liquidity, Young says. "I don't know if someone else has had a successful launch."

Pure Trading, operated by the Canadian Trading and Quotation System, launched its cross-printing facility on Oct. 12 and will kick off its continuous auction market on Jan. 19, 2007. It will be powered by a trading engine licensed from OMX of Sweden, according to Pure.

Officials from Pure were unavailable for comment on the Instinet venture.