Candian Stock Exchanges info.
I watched a BNN (Business News Network) item at 5:00 p.m. tonight.
Alpha trading handles 25 % of all shares traded.
The Alpha exchange is owned by the largest Canadian banks. RBC, Scotia, CIBC, TDW and ??PIIPC(close)
Apparently your trades are routed to the exchange that offers the best price at that moment.
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Boyd Erman
Globe and Mail Update
Published on Thursday, Apr. 22, 2010 6:21AM EDT
Last updated on Saturday, Apr. 24, 2010 2:57AM EDT
Alpha Group is seeking regulatory approval to become a full-fledged stock exchange, giving the up-and-coming share-trading market another way to attack the last vestiges of the TMX Group Inc.'s former monopoly.
Winning exchange status, which it hopes to have by year-end, would enable Alpha to win listings of its own, and with them the fees that companies pay. It would also, for the first time in Canada, create a system that could resemble the duelling markets in the United States, where companies can choose to list on the New York Stock Exchange or the Nasdaq Stock Market.
Created in 2007 by a group led by the country's largest banks, Alpha the next year launched what is known as an alternative trading system for stocks. An ATS is a type of market where investors can trade shares listed on the Toronto Stock Exchange and the TSX Venture Exchange, both of which are owned by TMX Group.
With the attempt to move into listings, Alpha is trying to grab a share of each of the three main money-making businesses that TMX Group has in stocks. Listings have been lucrative for TMX, generating about a quarter of the company's revenue.
Alpha first went after trading and the fees it generates, and now Alpha gets about 26 per cent of all trading in TSX-listed stocks, forcing TMX to cut its charges to compete. Then Alpha launched a market data product that competes with the TMX's offering for customers who want to see stock quotes and other trading information.
In listings, Alpha plans to compete on price, and with new products and services for companies that are interested in listing on a Canadian stock exchange, said Alpha chief executive officer Jos Schmitt.
“There is a need for competition,” said Mr. Schmitt, adding companies have inquired about listing on Alpha. “It's always been in the back of our mind.”
There is already competition in Canada at the level of smaller companies. For example, the Toronto-based Canadian National Stock Exchange seeks to list “emerging companies” and has more than 100 issuers. Last year, CNSX said it won over a dozen companies that switched their listings from TMX Group markets.
Alpha is aiming at larger companies, Mr. Schmitt said.
Alpha has a twin goal of making money and driving down costs for players in the market, in large part because some of the biggest players are Alpha's owners. The company is backed by some of the largest securities firms in Canada, including RBC Dominion Securities and TD Securities.
It's that ownership structure that is likely to be one of the most contentious issues about the push for exchange status. TMX Group is likely to raise conflict-of-interest concerns about any move by Alpha to get in on listings.
That's because listings are a pseudo-regulatory area. Exchanges have to rule on whether companies are eligible to list shares, and on other moves by companies once they are listed, such as mergers and stock sales.
The concern would be that Alpha, because it is owned by brokerage firms, would have an incentive to allow listings or transactions that generate banking fees for the securities firms that are the market's owners.
Tom Kloet, TMX Group's chief executive officer, has questioned whether the banks should be allowed to run a stock market, which he argued in December takes markets “back to the days when trading venues and exchanges were owned by select participants with conflicted interests and an ability to work in concert.”
Mr. Schmitt said he doesn't buy that argument. He said the banks' stakes in Alpha are too small to influence their decision making.
“What is Alpha for them in the grander scheme, given the risks they would take by doing something wrong?” Mr. Schmitt said, adding that there would be checks and balances and regulatory scrutiny.
“The entire exchange business has been built on this concept of member ownership for hundreds of years. Are we saying now that over the past two or three hundred years there was no integrity in that process?”
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