Canadian talks of a federal regulator continue, but doesn’t necessarily ease buy-side growing concerns over high frequency trading.

While slowly developing, Canadian market structure has been enduring some changes. While participants are either for or against increasing trading venues, especially dark, market participants are universally welcoming a future establishment of a federal regulator through a proposed Canadian Securities Act (CSA).

Yet, on December 22, the Supreme Court of Canada recently declined such a proposal, striking a national regulator as “unconstitutional” given the similar and existing role of the nation’s provincial regulators. The decision has been a blow for advocacy groups, such as the Portfolio Management Association of Canada (PMAC).

“Canadian investors deserve enhanced protection. Just as every Canadian should be entitled to certain consistent standards in transportation and public safety, they should also have equal access and protection within our capital markets—it can only be delivered through harmonized rules and standards,” said Katie Walmsley, president of PMAC.

The rise of high frequency trading (HFT)—is now reportedly more than 35% of all Canadian trading—is still a major concern for Canadian institutional buy-side traders. Despite hopes, Walmsley doesn’t anticipate a united federal regulator would be able to entirely assuage their fears.

“(Even with a national regulator), it’s still going to be some time before there is a draft of specific rules/regulation that can be coined separate from Canadian Securities Act,” she said.

One characteristic of the Canadian trading environment is the large institutional presence reportedly exercising block trades—a hotspot where HFTs can take advantage of buy-side traders.

“I think for now the provincial Canadian regulators are largely monitoring the U.S. with regards to decisions made by the SEC (Securities and Exchange Commission),” Walmsley told Markets Media.

An institutional Canadian buy-side trader could not be reached for comment by press time.