Sometimes all it takes is one big player to make a decisive move for a domino-type effect to take hold. In the Canadian capital markets, it seems as though BlackRock’s decision to move the listing venue for five of its iShares funds away from the TSX to NEO, Canada’s newest stock exchange, could be one of those moves.
Launched in March 2015, NEO is now the second largest trading venue for ETFs in Canada and the exchange currently facilitates 25% of all ETF trading volume. 12 of BlackRock’s ETF listings will begin trading as NEO-listed securities during the fourth quarter 2016, and it’s the first time a Canadian ETF provider has switched listings from the TSX to an alternative exchange.
“The BlackRock migration shows that a strong and credible alternative stock exchange is available in Canada, one that is fully operational,” says Jos Schmitt, President and Chief Executive Officer, NEO Exchange. “This type of competition is what this market needs. This market has been a monopoly for a very long period and that has been detrimental for innovation, efficiency and cost. It’s really impacted investors.”
The knock-on effects of BlackRock’s decision have also reached the media, with The Globe and Mail
announcing that it will offer live quotes for NEO-listed securities on its Investor site. Subscribers are now able to see real-time quotes on the suite of BlackRock iShares ETFs and Invesco Canada’s PowerShares DWA Global Momentum Index ETF, which was the first listing on the NEO Exchange. Readers who visit the Globe and Mail website without subscription can see 15-minute delayed quotes
To take full advantage of the competition in Canada’s capital markets, Schmitt believes advisors should take the time to get informed on the country’s 13 different stock exchanges. “Quite a few don’t realize that any listed security in Canada, whether it’s TSX or NEO, can be traded on a multitude of different marketplaces,” Schmitt says. “The different marketplaces do not operate in the same way and understanding that is important. If advisors educate themselves, it will have a significant impact on the quality of their executions.”
In order to maximize results, it’s also important for advisors to have access to (and study) all market data, not just the TSX. “If you take ETFs, only 30% of the volume traded is on the TSX, so some advisors are missing out on what’s happening,” Schmitt says. “It’s important to take action and make sure they have access to the data, it’s easy and available for free.”
The modern investor is more aware of what’s happening in the markets than ever before. So, to stay ahead of the game, and remain valuable, it’s important for advisors to present their clients with a clear picture of everything that’s going on. “By understanding all of the market data, these advisors will be the ones in the best position to take advantage of the best possible solutions,” Schmitt says.