Aequitas NEO Exchange Inc.has submitted a formal request to the Canadian Securities Administrators (CSA), the provincial securities regulators, urging them to address Canadas market data issues by mandating access to top-of-book real-time consolidated market data for all Canadian investors, including retail investors and their investment advisors.
Consolidated market data is important for investors to see the complete picture of trading activity and enables them to make fully informed investment decisions. NEO encourages all interested stakeholders to join this effort by visiting www.marketdataforall.com and make their voice heard.
Despite a number of innovative and bold initiatives, we have not been able to make any substantial progress in making real time Canadian consolidated market data accessible to retail investors and investment advisors, stated Jos Schmitt, President and Chief Executive Officer, NEO Exchange. Our approach last year focused on providing a low cost alternative that would eliminate the cost hurdle, but our initiative was thwarted by the TMX Group. At the time, we communicated our view that it was a sad day for the Canadian capital markets – and the country as a whole – when no one was ready to put the interests of the little guy first. We are now asking the bodies that regulate our capital markets to tackle this issue once and for all. In line with our continuing efforts to bring more fairness and transparency to the Canadian capital markets, we are calling on the securities regulators to step in and ensure that all investors are provided with an opportunity to make fully informed investment decisions. The current situation has negative implications for Canadian investors, Canadian public companies and Canadian manufacturers of listed investment products.
Market fragmentation in Canada continues to increase and the market share of the Toronto Stock Exchange (TSX) has further declined due to increased competition in trading. Reliance on TSX and TSX Venture Exchange (TSX-V) market data only – which is the situation today for most retail investors and investment advisors – to represent the current market for a security was practical when they were the only listing and trading venues. Now there are 12 other trading venues in Canada that, on average, account for approximately 65 per cent of all ETF trading in Canada and 40 per cent of all trading in TSX and TSX-V listed companies. It is time for a market data solution similar to what is in the United States: mandated access to real time consolidated market data.
The CSA has analyzed the Canadian market data cost issue and implemented initial solutions to prevent these costs from becoming even more egregious. While more needs to be done to bring the costs down, these laudable initiatives are not addressing the fundamental issue: the vast majority of retail investors and investment advisors do not have access to the full set of information, and many of them are not even aware they have a partial view.
Failing to mandate access to consolidated market data would maintain the current situation whereby:
- The least market structure savvy market participants are exposed to risks of uninformed investment decisions and lesser quality trading executions;
- A disservice is being done to TSX and TSX-V listed companies and investment products that cannot benefit from all the trading activity in their listed securities because it is not fully visible to investors;
- Canadian investors continue to be exposed to a single point of failure if the data they receive from the TSX or TSX-V has a service outage; and
- On top of all of the above, the CSAs intention of encouraging meaningful competition amongst Canadian marketplaces is not achieved.
We are encouraged by some of the progress made to date, continues Jos Schmitt. But we will not stop pressing the issue until a clear solution is provided that will address the issues our market, our investors and our public companies face. It is time for the Canadian securities regulators to mandate access to top-of-book consolidated market data for all investors, just like the Securities Exchange Commission did in the United States.
Click here to read the full letter NEO sent to the CSA on January 26, 2017, and visit www.marketdataforall.com to learn more about Canadas market data issues.
