Advisors say a new stock exchange proposed by an RBC-led group could loosen the grip of the TSX, but doubt whether promised limits on high frequency trading (HFT) represent a win for retail clients.
“I’m all open for competition, if they want to put a new exchange in and people who want to trade securities feel that they will get better liquidity or better pricing from those shares on the new exchange, then why not?” said Karl Schempp, senior investment advisor with Industrial Alliance Securities in Burlington.
However, Schempp adds that he hasn't seen any true demonstration of real damage from HFT, and questions whether the consortium's claims are more for public-relations reasons. “If their goal is to launch a competing exchange, they could be using the HFT [argument] as it helps support their position for a second exchange.”
The consortium announced its intention to launch a new equity exchange to take on the Toronto Stock Exchange (TSX) and to target what it calls predatory HFT, a form of computerized high-volume trading. Continued on Pg. 2.