As the Canadian markets moved through 2024, various factors influenced trading patterns, market policy and investment activity. According to Dan Kessous, CEO of Nasdaq Canada, a combination of macroeconomic factors, regulatory changes and product innovation drove notable developments.
Kessous is responsible for the Nasdaq Canada Exchange’s strategy and oversight of its business and operational functions. He joined Nasdaq in 2016 through the acquisition of Chi-X Canada ATS where he worked since its inception and became CEO in 2011. In a conversation reflecting on the past year and looking forward to 2025, Kessous outlined key trends that shaped the market environment and what lies ahead for Nasdaq Canada.
Macroeconomic Backdrop and Market Activity
From a broader economic perspective, 2024 marked a year of transition. The backdrop was shaped by high inflation levels and subsequent actions by central banks, including the Bank of Canada.
Central banks, across the globe, began adjusting their strategies to address inflation. “This was the year of a pivot in terms of trying to fight inflation from all the central banks, not just the Fed in the U.S., but London, Europe and Canada,” said Kessous. A significant aspect of this effort was the policy around interest rates, where central banks moved towards decreasing rates. This had a strong impact on market activity, as it fostered optimism in the markets and led to increased trading volumes.
For Nasdaq Canada, the results were promising. The exchange saw a 12% increase in overall volumes year-over-year, a positive trend considering the high trading levels of previous years. Several events contributed to this uptick, including key actions by central banks and strong results from major tech companies; “in August, we saw an uptick in volume and volatility driven by results for the FANGs, the big tech companies,” Kessous shared. Additionally, the decision by the Bank of Japan to raise rates and the Federal Reserve’s stance on interest rates had ripple effects in global financial markets.
Regulatory Landscape in Canada
In 2024, Canadian regulators focused on maintaining a competitive and transparent marketplace. The year saw regulatory attention on both market structure and market data. Kessous pointed out key developments on the regulatory front, particularly in the context of cross-border trade between Canada and the U.S.
A significant regulatory theme was the U.S. Securities and Exchange Commission (SEC)’s proposed market reforms, especially around tick sizes and fee caps. “There are a lot of stocks that are dual-listed and trade cross-border. It’s a big portion of what’s happening in Canada, and those are also important names that trade in the U.S.,” Kessous explained. Canadian regulators aimed to align their policies with U.S. regulations to ensure the competitiveness of Canadian markets.
Another major focus for Canadian regulators was market data. Kessous acknowledged the growing interest in how market data is priced and accessed, particularly for retail investors. “There’s been a lot of work done in Canada by our regulators to improve how market data is distributed and how it’s
priced,” he said. A consultation paper on the matter received diverse feedback from market participants, and as a result, regulators decided to push the consultation further. “They created a couple of working groups with industry people that would participate in that group and try and resolve it in a gently managed manner.”
Nasdaq Canada’s Product Innovation: A Focus on PureStream and Block Trading
A major highlight of Nasdaq Canada’s achievements in 2024 was the growth of its PureStream product. This order type, introduced on Nasdaq Canada’s dark pool, CXD, was designed to offer market participants a more passive way to execute trades based on a trajectory of market volume.
The PureStream product has been successful in attracting users, growing steadily since its launch. Kessous noted that Nasdaq Canada spent considerable time gathering feedback from customers to refine the product. “We spent the first part of last year engaging with customers, taking the feedback… and towards the second part of the year, we made further adjustments to the product.” The results from these improvements were promising, with significant volume growth in early 2025.
PureStream is part of a broader strategic initiative for Nasdaq Canada to expand block trading in Canada. Nasdaq has been working on connecting various liquidity pools within its CXD dark book. “We are launching a project to connect all these pools of liquidity together… PureStream Connect, that connects the conditional orders to PureStream,” Kessous elaborated. By enabling participants to interact across different liquidity pools, Nasdaq Canada is enhancing its offering in block trading.
In addition to product innovation, Nasdaq Canada placed a strong emphasis on performance and resiliency. The rise in volume and volatility over the past few years prompted significant upgrades to Nasdaq Canada’s technology and infrastructure. “We continue to invest in performance. It’s hardware, but it’s also software,” Kessous emphasized. In response to increased traffic, Nasdaq Canada has also launched a new recovery server for market data to ensure quick snapshots of market conditions.
Looking Ahead: Trends and Priorities for 2025
Looking into 2025, Kessous anticipates that many of the same regulatory and market-driven trends will continue. One key issue for the year ahead will be the ongoing discussions surrounding the SEC’s proposal to alter market structure, including changes to tick sizes and fee caps. “Our regulators want to be ready, should it go forward… and try to do it in sync with the U.S.,” Kessous shared.
Other anticipated regulatory changes in 2025 include proposals to adjust Canada’s short sale regime and further efforts to adapt market data distribution systems. Kessous also highlighted the growing role of artificial intelligence (AI) in market surveillance and product development. “AI has been a big focus for Nasdaq,” Kessous noted, adding that the firm is working to incorporate AI into various aspects of its operations, from fraud detection to enhancing internal productivity.
From a product standpoint, Nasdaq Canada will continue to prioritize the growth of PureStream and work on improving its block trading capabilities. Furthermore, the company aims to enhance its smarter router technology, which is responsible for a significant portion of the trading volume in Canada.
Nasdaq Canada’s Position in the Global Marketplace
As for the competitive landscape, Kessous highlighted that Canada’s financial market remains competitive but faces challenges, particularly from the U.S. “Canada is already a very competitive market, locally, we have probably 15 marketplaces all competing for the same pie,” Kessous said. However, he also noted the increasing challenge posed by the dual listing of stocks between Canada and the U.S., where U.S. exchanges have seen a rise in market share.
To remain competitive, Kessous emphasized that innovation is key. “We need to keep innovating and keep listening to clients,” he asserted. For Nasdaq Canada, staying competitive means building a robust infrastructure, expanding product offerings and maintaining a focus on fairness, transparency and resiliency in all its operations. Looking forward, the company is well-positioned to continue its momentum in 2025, with a sharp focus on emerging technologies like AI, block trading and maintaining a resilient, competitive marketplace. “As the financial landscape continues to evolve, Nasdaq Canada’s ability to adapt and innovate will be critical in ensuring its ongoing success.”
