Toronto-based TriAct Canada Marketplace, which operates the MATCH Now alternative trading system, is underway with a plan to improve customers’ trading experience and gain market share.
TriAct recently proposed platform and infrastructure enhancements to the Ontario Securities Commission and the Investment Industry Regulatory Organization of Canada, and the improvements should be in place by year-end, said Torstein Braaten, chief executive of TriAct.
On the platform side, improvements are aimed at trading of ‘odd lots’ and stocks listed in both Canada and the U.S., as well as adding symbols and making matches for large institutional trades available continuously.
While odd-lot trades that split off from a larger order executed in MATCH Now are now routed elsewhere, “we’re going to be able to trade the odd lot in a separate odd-lot book,” Braaten told Markets Media. “We expect this to bring in incremental volume and liquidity, and enhance all of our participants’ overall experience within MATCH Now, especially retail players.”
“We’re also bringing online the ability to trade inter-listed symbols” at the Canadian Best Bid and Offer (CBBO),” he said. “Our intention here is to bring large blocks back to Canada and move away from the U.S. wholesaler model. Our participants will receive price improvement and better cost of execution, without having to look to a U.S. venue.”
Also on the platform, traders will be able to buy and sell all TSX symbols on MATCH Now, including debentures, U.S. dollar-settled preferreds, and convertibles. Lastly, MATCH Now’s passive book, or ‘liquidity destination’, will upgrade its matching engine from running on a cycle of a few seconds, to continuously.
“Our matching engine will be working the very moment a trader puts an order on our passive book,” Braaten said. “We’ve coined this improvement ‘event-driven liquidity matching’.”
On the technology side, TriAct has a new market data feed offering public and private data. The ATS operator is also building a means to check for 'contra' liquidity.
The planned enhancements should bring about “increased fill rates, more opportunities for price improvement, and more savings through improved cost of execution,” Braaten summed up. “We expect these benefits to be passed along to the end client, such as the buy side.”
TriAct’s MATCH Now comprises 93% of all dedicated Canadian dark pool trading and more than 60% of all dark trading including hidden orders on lit venues, according to Braaten. In the context of Canadian trading overall, TriAct’s MATCH Now accounts for 4-5% of all trading activity on TSX listed equities by both value and volume. “We believe there remains significant potential for our market share to grow,” he said.
More broadly, Braaten noted more focus on education, industry-wide. “We expect investors to become smarter and more demanding,” she said. “We expect the scrutiny that's going on in the U.S. around the regulatory framework and dark pools to become the ‘new normal’.”
“The onus is on the marketplaces to be transparent and forthcoming with all industry players, including the regulators, the sell side, and the buy side,” he continued. “We need to ensure that the entire investing community is up to speed and well-educated on how the trading landscape operates here in Canada, and on top of that, how we are very different than the U.S.”
Featured image via iStock
