March 1, 2014

Structural Changes in Canada

By John D'Antona Jr.

More change is coming to the equity trading markets of the Great White North.

Last year, the Canadian equity markets saw several developments that changed the way traders did business. These changes included new rules for electronic trading; additional venues formed by existing equity ATSs; the arrival of a taker/maker pricing scheme; the Aequitas proposal; and regulators' proposed review of the existing order-protection rules.

Doug Clark, ITG

"This year promises even more change to market structure, in Canada, resulting in even greater complexity and disparity of trading results," said Doug Clark, managing director of research at ITG in Canada. Clark forecast several major changes that will affect the Canadian trading markets. First, high-frequency trading volumes will increase dramatically in the coming 12 months. Second, new markets like Aequitas and IEX (U.S.) will force legacy markets to adjust their models. Third, several provinces and territories will hop on the single-regulator bandwagon.

Fourth, Canadian regulators will spend 2014 talking about order-protection rules, but the year will end without any significant rule changes, or even proposals. Fifth, indexers will finally get needed changes to the TMX MOC in 2014. Sixth, 2014 will finally see real moves toward the electronification of other asset classes. and finally, And finally, big changes will take place in Canadian-listed derivative markets, he said.

"This year will likely see a significant increase in the speed of trading, as a result of one or possibly two significant technology introductions," Clark said.

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