New Aequitas stock exchange gets green light from OSC
Rival to TSX would use mechanisms to deter high-frequency trading
Aequitas Neo Exchange, a proposed new Canadian stock market aimed at deterring high-frequency trading strategies, has been approved by the Ontario Securities Commission.
The largest of the Canada's provincial and territorial market regulators said Monday it has issued a recognition order for the new exchange, which is backed by the country's largest bank and several large financial firms.
The order is effective March 1, 2015.
Royal Bank is among the supporters of Aequitas, along with the U.K.-based Barclays banking group, a Canadian pension fund manager, several brokerages and BCE Inc.
Aequitas said Monday it is on track to launch its trading and listing platform in the first half of next year.
"We are now in a position to help promote confidence and build an exchange of the future using a bold new blueprint that puts investors, companies and their dealers first," said Jos Schmitt, president and chief executive Aequitas NEO Exchange.
The Aequitas NEO Exchange is expected to trade stocks listed on the Toronto Stock Exchange and TSX Venture Exchange, which are owned by the TMX Group Ltd.
In its application to the Ontario Securities Commission, Aequitas said its Neo Book will use a random delay and "uneconomic transaction fees" to discourage high-frequency trading.
The strategies used by high-frequency traders have been criticized for putting traditional investors at a disadvantage in current markets, which cater to high-volume trading to generate revenue.