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.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
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. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
WatersTechnology latest edition
Check out our latest edition, plus more than 12 years of our best content.
A new data analytics studio born from a large asset manager hits the market
Amundi Asset Management’s tech arm is commercializing a tool that has 500 users at the buy-side firm.
How exactly does a private-share trading platform work?
As companies stay private for longer, new trading platforms are looking to cash in by helping investors cash out.
Accelerated clearing and settlement, private markets, the future of LSEG’s AIM market, and more
The Waters Cooler: Fitch touts AWS AI for developer productivity, Nasdaq expands tech deal with South American exchanges, National Australia Bank enlists TransFicc, and more in this week’s news roundup.
Inside the company that helped build China’s equity options market
Fintech firm Bachelier Technology on the challenges of creating a trading platform for China’s unique OTC derivatives market.
Experts say HKEX’s plan for T+1 in 2025 is ‘sensible’
The exchange will continue providing core post-trade processing through CCASS but will engage with market participants on the service’s future as HKEX rolls out new OCP features.
‘The opaque juggernaut’: Private credit’s data deficiencies become clear
Investor demand to take advantage of the growing private credit markets is rising, despite limited data, trading mechanisms, and a lack of liquidity.
Overnight trading blocked, consolidated tapes, BlackRock’s Larry Fink, data costs, and more
The Waters Cooler: Deutsche Börse provides crypto custody, FIS has a new GenAI tool, and some M&A activity in this week’s news round-up.