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Reshaping Canada’s Equities Trading Landscape

October 23, 2014

Canada's equities markets fuel industries, innovation and operations in Canada and around the world. Capital is raised, securities are offered and the trading begins. This system has been in place for centuries, but it has evolved over time and, in some aspects, the evolution has been revolutionary. This is especially true in equities trading.

Securities can trade in any number of markets and those buying and selling – literally exchanging company ownership – can now do so in less than one hundred microseconds (1/10,000th of a second). Traditional trading floors have all but disappeared with the proliferation of technology and greater speed. As trading has become more sophisticated, accessible and efficient, investors now have access to an incredibly rich set of investment options at historically low costs.

Dramatic changes in technology, market structure evolution and an increasingly global landscape have brought many benefits, and it is imperative that the industry keep pace. Today, we have reached a point where the challenges facing Canada's capital markets require decisive action to preserve their efficiency and integrity.

Our team has consulted extensively with a broad group of market participants and has narrowed our focus to three significant issues in equities trading that require our attention and action:

  • Canadian order flow is migrating to the U.S.
  • Technology-driven markets are not optimized to serve all
  • Market complexity is on the rise

We have examined each of these issues at great length and today we announced bold steps to tackle each one. An overview of our proposed changes, which are subject to regulatory approval, is in our position paper: Reshaping Canada's Equities Trading Landscape.

These initiatives are open for discussion and we encourage all market participants to carefully consider each and to share their views. We have filed the first proposal (amendments to Alpha) with regulators and expect these to be published for comment in early November.

We believe each of the proposed changes will have a beneficial and singularly significant impact on the market. However, to successfully reshape Canada's equities trading landscape for the benefit of all, the debate, collaboration and support must be open and expansive. We encourage and welcome your input on the issues and in helping to bring forward real, actionable solutions that serve all market participants.

Kevan Cowan, President, TSX Markets and Group Head of Equities