TMX Launches Alternative Equities Trading System
Thursday, July 14, 2011

TMX Group, the Toronto Stock Exchange Operator, has officially launched its alternative equities trading system, having received regulatory approval for the move last month.

Trading on TMX Select officially began on July 11. As required, approval was secured from both the Investment Industry Regulatory Organization of Canada and the Ontario Securities Commission. According to TMX, its new system offers participants additional execution and liquidity-seeking opportunities through a differentiated marketplace and pricing model.

Eight trading symbols were enabled for trading on TMX Select on its opening day. The remainder of Toronto Stock Exchange and TSX Venture Exchange symbols will be enabled in a phased approach over the coming weeks.

TMX Select will charge liquidity seekers and liquidity providers the same nominal fee, imposing on both sides of a trade CAD0.0002 per share for stocks priced CAD1 and over, and CAD0.0001 per share for stocks priced under CAD1. TMX calls this "symmetrical pricing", and argues that it is significantly different from the standard maker-taker model usually maintained by Canadian marketplaces, thus presenting net liquidity takers with a cost saving opportunity.

Commenting on the launch, Gary Knight, Vice President, Trading, TSX Markets and CEO of TMX Select, said: “TMX Select was created in response to our customers' evolving trading strategies. Its benefits to participants are clear – seamless connectivity, unique pricing, expanded trading hours, simplified market structure, and strict price-time priority”.

Kevan Cowan, President, TSX Markets and Group Head of Equities, added: “Bringing TMX Select to market and introducing an innovative pricing model both reinforce our commitment to being the leader in the Canadian marketplace".

TMX, which recently saw its plans for a merger with the London Stock Exchange Group (LSEG) collapse, is the subject of a takeover bid by the Canadian pension fund and banking consortium Maple. Were the offer to be accepted and the deal approved, TMX shares would be exchanged for CAD40 in cash, plus 0.3016 of a share of Maple. According to the consortium, this values the deal at CAD3.8bn (USD3.95bn). When the LSEG deal collapsed, TMX's CEO Tom Kloet conceded that, in spite of previous rejections of the bid, TMX's Board of Directors would evaluate its options, including the Maple offer. However, there has been no further public announcement on the matter.