09.29.2011
By Terry Flanagan

Chi-X Canada Introduces New Pricing

The Canadian trading platform will launch a new pricing system for ETFs and certain TSX-listed securities.

Effective Oct. 1, Toronto Stock Exchange-listed exchange-traded funds, as well as TSX-listed securities under $1 will have new fees for Chi-X Canada subscribers.

“We’ve done pricing promotions in the past, but this is a fee schedule change that we’ve planned for a while,” said Stephen Hretchka, vice president of Chi-X Canada. “So we reduced the fees based on customer feedback, and lowered the take rate down to 24 which is a competitive rate among the big three markets in Canada.”

The spread on ETFs was also reduced in the process, from four mils to three mils. The rebate for providing liquidity had been 25 mils, compared to 29 mils for takers. The hidden liquidity provider rebate remains the same at 20 mils.

“We expect it to have a positive impact on market share in ETFs, and our overall market share as well,” said Hretchka. “We definitely expect a positive impact based on the new pricing schedule.”

Also part of the new fee schedule are reductions made to TSX-listed securities under $1. The liquidity removing fee has been reduced to 1 mil, while posting liquidity is now free with no rebate or fee.

The volatility seen in the markets in recent weeks has also made its way north of the border. Chi-X Canada has been able to hold steady despite the tumult.

“We’ve seen a lot of volatility, that’s been the biggest story in last few weeks,” said Hretchka. “We’ve seen our market share hold steady and even gone back up a bit from where it had leveled off in August. We’re definitely weathering the storm and even increasing market share back from the summer lows.”

Chi-X was first founded in 2007 by Instinet, an agency-only broker. Chi-X Europe, which was the company’s initial offering, was spun off as a separate entity in late 2007, and is now owned and operated by a consortium of broker-dealers. While Instinet still owns a 34 percent stake, Chi-X Europe is operated independently. It is currently the target of a takeover offer from Bats Global Markets. The transaction is currently awaiting regulatory approval from the U.K. Competition Commission. A decision on the deal is expected by early December. Chi-X Europe has about 20 percent market share in Europe.

Today, Chi-X Global operates Chi-X Canada, Chi-X Japan, Chi-East, a joint dark pool venture with the Singapore Exchange, and Chi-Tech, a technology services unit. The launch of Chi-X Australia is expected in late October.

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