Canadian Anti-HFT Exchange Details Plans to Regulator

Institutional investor-focused Canadian exchange Aequitas Neo has made its formal exchange application with the Ontario Securities Commission (OSC).
By Editorial
Institutional investor-focused Canadian exchange Aequitas Neo has made its formal exchange application with the Ontario Securities Commission (OSC) and is expected to begin offering services in the first half of 2015.

The new venue, which has been compared to U.S.-based exchange IEX that featured heavily in Michael Lewis’ high-frequency trading (HFT) exposé “Flash Boys,” aims to provide greater transparency for buy-side traders and provide better matching opportunities than are available in broker pools.

The OSC has published a copy of the venue’s application and is seeking comments from industry stakeholders by August 26. Aequitas, which was founded by a mix of Canadian corporations including professional money managers, pension fund managers, institutional and retail brokers and Canadian issuers, says it wants market participants to comment on their application to “make their voice heard and influence the future of Canadian capital markets.”

“We are on a mission to reverse the trends that currently trouble our markets, to restore confidence and to build a new exchange that puts the interests of investors and issuers first,” says Jos Schmitt, president and CEO of Aequitas Innovations.

“We will do so through solutions that leverage technology, efficiency and innovation and with a governance model that maximises issuer and investor participation.”

Schmitt has previous experience running anti-HFT venues in Canada and in 2011 launched Alpha IntraSpread, now owned by TMX Group.

One of the venue’s key aims outlined in the application is to curb predatory trading activity through targeted interventions. It said its model will enhance market quality by focusing on benefits for long-term investors and those without speed and technological advantages.

It also hopes to “revive the role of the traditional market maker in Canada” through its market structure innovations, promoting reliable liquidity, price discovery and setting a balance between market maker benefits and obligations.

Aequitas says it has already received a high level of engagement from the Canadian investment community since its pre-filing with the OSC in October 2013, with many supporting its calls for meaningful competition and fairer markets.

Earlier this month, the exchange announced that it selected a suite of capital markets technology from MilleniumIT, which powers exchanges such as the London Stock Exchange, Borsa Italiana and the Johannesburg Stock Exchange.

«