Summer C-Level Series: Torstein Braaten, TriAct Canada08.04.2014
What have been the main themes of your business so far this year?
• Increased Breadth & Depth to Become the World’s Most Successful Dark Pool by Market Share.
TriAct’s MATCH Now, Canada’s Premier Broker-Neutral ATS, has matured to the point where our participants actively seek to connect to our marketplace. Our growth in market share, which peaked at 5.2% by volume in Q2/14, has largely been driven by increased retail and ETF order flow. Our subscribers account for >97% of trading volume in Canada. By market share, we are the largest dark pool in the world. We are 93% of all dedicated Canadian dark pool trading and >60% of all dark trading including hidden orders on lit venues. With a mindset to continually improve, to accommodate and anticipate clients’ needs, we believe there exists significant opportunity for us to incrementally grow. As a result, we always have a full pipeline of enhancements to differentiate ourselves and provide value to our clients.
• Fair Access & Investor Protection.
We provide a material amount of liquidity and our presence is undeniable on the Canadian trading stage. Since inception, we have held Canadian regulations and rules to the highest regard; our platform is designed to attract natural retail and institutional order flow. Our value proposition is well-known: price improvement, lower cost of execution, anonymity and no information leakage. We offer a flexible platform with two destinations to trade – Active Market Flow and Passive Liquidity, the latter of which is particularly well-suited for resting large blocks without market impact.
• Partnering with Industry.
We are committed to partnering with all players in the industry to build an efficient and fair marketplace for traders to execute non-displayed orders. We work with our investors and the regulators, via open-forum User Advisory Committee meetings, customized reporting and trade analysis, and premier client service. When we visit our clients they are confident that their feedback is thoughtfully considered.
What has surprised you in 2014?
• TriAct’s Taker/Taker Model Should Set the Global Precedent.
We are surprised our story has not been told. Canada’s market structure model protects the natural investor, and TriAct has emerged as the most successful dark pool in the world measured by market share. Operating under Fair Access, with a taker/taker model, and designed as a mid-point marketplace referenced to the NBBO, natural investors come to TriAct knowing they are in a pool with other natural investors.
• Media Needs to Address Differences between Canada & the U.S.
While it is good to see the conversation flowing around market structure and trading, a surprising and concerning point is the media’s failure to delineate the differences between Canada and the US. Commercial media has yet to vocalize that the real problem in the market is more closely linked to the lack of transparency surrounding internal broker pools and the conflicts of interest that can arise within them, especially in the US. Media has yet to showcase the difference between these problematic and opaque broker pools vs. the value-additive nature of most ATS’ in Canada.
• Renewed Emphasis on Educating.
Educating the investor community is becoming increasingly important. When we speak to clients, we are not only focusing on the numerous merits and benefits of trading on TriAct’s MATCH Now, but we also spend considerable time making sure our clients (and subsequently, their clients) are up to speed on the competitive landscape and market structure. Once clients understand the full picture, the value proposition of TriAct’s MATCH Now is obvious and highly appealing.
What are your expectations for the duration of 2014?
• Stick to the Game Plan.
Our focus will continue to revolve around strengthening relationships, building trust, and partnering with industry players. Imperative to our ongoing success is our ability to stay in front of our clients, anticipate their requests, and keep them well-informed.
• Build Market Share.
We will continue to build market share by reaching out to various business units on the sell-side, and we will continue to expand our platform and infrastructure. We recently submitted a proposal to the OSC and IIROC that will facilitate our ability to trade odd-lots, interlisted names at midpoint or at the NBBO (similar to how we operate with ETFs), trade the full suite of TSX symbols including debentures, and also introduce event driven liquidity matching on our passive book. The proposal also includes some technology enhancements. Furthermore, we expect volumes to increase in the latter half of the year, as we move out of the summer lows that came earlier than seasonally normal.
• Continued Scrutiny as Investors Become Smarter and More Demanding.
We believe there will be continued scrutiny on the regulatory framework and on dark pools, especially in the US, and that more investigations will become public. Industry players need to pull together to better educate the media and public as to what the issues in our industry truly are, address conflicts of interest, and devise a measured response to handling problems when they arise. Uninformed media frenzy and interesting story books have created a lot of unnecessary worry and investors are becoming increasingly inquisitive as to how orders are executed and how the Canadian marketplace operates. We need to educate investors and the public, prove that not every marketplace is the same and that Canada is structured much differently than the USA.