Omega To Launch Maker-Taker Exchange

Terry Flanagan

Omega Securities Inc. has announced its intention to operating a second trading platform, to be called Lynx ATS in the fourth quarter of 2013.

OSI, which also operates Omega ATS, says that the new platform is necessary to create a level playing field in the Canadian exchange industry, which for many years has been dominated by TMX Group’s Toronto Stock Exchange, but in recent years has seen new venues, including dark pools, spring up.

With the consolidation of Maple and the recent approval of CX2, OSI believes it is necessary for its competitiveness to operate a second marketplace.

“With the Maple driven market consolidation, the emergence of new marketplaces is the only way to ensure the competitive pricing and innovative solutions our industry requires,” said Sean Debotte, director of business development at Omega ATS.

Sean Debotte, Omega ATS

Sean Debotte, Omega ATS

OSI will impose no additional charges for Lynx ATS market data, connection fees, and subscription fees.
Unlike Omega ATS, which employs an inverted ‘taker-maker’ pricing model, Lynx ATS will employ maker-taker pricing for all trading activity.

“In Canada, 95% of all volume is executed on maker taker venues,” Debotte said. “Omega attracts a niche due to our inverted pricing model. With Lynx, we want to attract that other 95% of flow without disadvantaging our niche customers. We will be offering a completely different pricing schedule to those who prefer maker-taker.”

In 2011, Omega ATS switched from a maker-taker pricing structure to taker-maker, removing fees on orders that take liquidity, essentially allowing these investors to trade for free.

A delicate balance between the benefits of greater completion and the risks of fragmentation exists in the exchange industry.

In the U.S. it is now possible to trade stocks at 300 different venues of which only 13 are exchanges, the rest are broker operated Alternative Trading Systems and other broker operated systems which are known as “dark pools” and account for over 35% of share volume traded in the U.S.

The expansion of this off-exchange trading (dark trading) so that they are able to offer an alternative to exchanges for orders of all sizes and types was an important innovation implemented by regulators in the hope that fragmented markets would help improve the quality of their markets, according to Dr. Hui Zeng, a lecturer at the University of Sydney. “It doesn’t appear that the current level of fragmentation brings fairer or more efficient markets in the U.S.”

Chi-X Canada ATS, a wholly-owned subsidiary of alternative trading venue operator Chi-X Global Holdings, has announced the pricing schedule for its new alternative trading system, CX2 Canada ATS, which is scheduled to launch on May 3.

Chi-X Canada is a high-performance alternative trading system marketplace for the trading of Toronto Stock Exchange (TSX) and TSXV-listed securities.

Chi-X Canada and its new market place CX2 aims to provide cost savings to investors through trading efficiencies, ultimately helping to improve investment performance.

The market, which is the largest ATS platform in Canada, offers strict price/time priority, post-trade attribution, market-agnostic smart routing, advanced order types, trade reporting, risk management tools, historical market data, co-location and cross connectivity services.

TMX Group is migrating the Alpha trading platform, which it acquired via the Maple deal, to the TMX Quantum platform, which is used by all participants on the Toronto Stock Exchange. The migration is expected to be completed by mid-2013.

In addition to the technology migration, TMX plans to move Alpha into existing TMX Group data centers, offering customers further reductions in complexity as well as cost-savings opportunities. TMX Datalinx will also manage Alpha data distribution through its existing channels.

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