Canadian ATSs Gear Up

Terry Flanagan

As the prospective buyout of TMX Group by Maple Group moves forward, operators of alternative trading systems introduce new products and technology in an effort to gain an upper hand.

“There’s a technological arms race between ATSs coming up,” said Mike Bignell, chief executive officer of Omega ATS. “We built our technology infrastructure 16 months ago, and will be performing a system upgrade in five to six months, and will bring our guns. There will be an arms race, technologically, at the ATSs and stock markets in Canada.”

According to Bignell, Omega has a “mandate to innovate,” being a smaller firm and having no affiliations with big banks, and that “fresh ideas from fresh players in the marketplace” is what will help drive competition among ATSs and exchanges.

Along with competitors such as Chi-X Canada and Pure Trading, Bignell believes that Omega is flexible enough to adapt to a changing competitive landscape among trading platforms in Canada. “It’s incumbent on (ATSs) to innovate and be competitive in pricing to survive. We’ve held up our end of the bargain as far as innovation.” Recently, Omega introduced the ability to trade U.S. equities in Canadian dollars, while Pure Trading has expanded its trading hours.

Even if the deal between Maple and TMX were to be completed, Bignell does not think it would create any significant competitive imbalances in Canada.

“It may lessen competition a little bit, since one of (Alpha Group) or TMX Select will go away,” said Bignell. “It may make it a bit easier for Omega in the short haul. We’re not averse to fighting a bigger monkey, everyone is potentially bigger than we are, so size doesn’t frighten us. They both have considerable resources, so combined it won’t make much of a difference.”

With the U.S. and Canadian economies so closely intertwined, markets turmoil stateside presents challenges for Canadian market participants. “We’re affected by anything that happens in the U.S,” said Bignell. “We’re always going to be damaged by our biggest trade partner being damaged.”

Despite the tumult, Bignell is optimistic about a turnaround.

“It’s a bit of a slippery slope right now, its depends where all the big money is going,” said Bignell. “There are a lot of people selling, and there will be a lot of people on the sidelines come the fall. If the U.S. reduces its debt, we can roar back.”

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