Exchange Launches Upgrade

Terry Flanagan

Canada’s main exchange will introduce a new set of upgrades to its trading technology that will further bolster its presence on the global marketplace.

TMX Group has announced the planned launch of its next generation trading technology, TMX Quantum XA, which will cut the speed of an order execution to below 100 microseconds, which is a 20-fold improvement in median latency. The new trading system will be able to handle 200,000 orders per second.

“This is extremely important not only from a speed perspective, but also resiliency, consistency, capacity and throughput perspectives,” Kevin Sampson, vice president of business development and strategy at TMX Group, told Markets Media. “We’ve made significant investments in trading technology over the past few years. There is a growing industry demand within our borders as well as outside our borders, for high performance marketplace technology. We need to ensure that we continue to strengthen our position on the global stage and attract additional liquidity to our market.”

TMX Quantum XA will roll out first on TMX Select, the exchange group’s alternative trading system, in Q1 2013. Implementation on the main Toronto Stock Exchange and TWS Venture will begin by year-end 2013. TMX expects to incur additional operating expenses of about $4 million annually to support the initiative.

“TMX Select is a great platform to introduce this high performance technology for the Canadian industry,” said Sampson. “It allows dealers and participants to manage the changes before we roll it out to the broader TSX and TSX Venture exchanges.”

TMX also announced the expansion and upgrade of its co-location facility, which goes into effect Q4 of this year. Increased demand from buy-side participants, as well as vendors and other service providers has sped up the latest phase of upgrades. The facility provides low latency access to the TSX, TSX Venture, Montreal Exchange and TMX Select trading engines and market data feeds, which account for 71% of Canadian equities liquidity and 100% of exchange derivatives liquidity.

CME Group will be launching its own co-location services, which it expects will generate between $30 million and $40 million in revenue annually, in the first quarter. Exchanges worldwide are looking to increase the speed and lower the latency of their trading platforms, which most directly benefits high-frequency traders. Co-location facilities are located as close to their machine engine as possible, giving trading firms nearly instant execution times. HFT has grown to about 75% of trading volume in the U.S., according to industry estimates.

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