November 4, 2015 / 11:20 PM / 2 years ago

Aequitas, TMX rivalry set to heat up over fund trading platforms -sources

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TORONTO, Nov 4 (Reuters) - The rivalry between Canada's TMX Group Ltd and smaller rival Aequitas Innovations Inc is set to intensify as the two exchange operators race to create platforms for the buying and selling of some actively managed funds.

Two sources with knowledge of the plans, who asked not to be named as details are not yet public, said Aequitas is aiming to launch a platform that will be operational in the first quarter of 2016.

Aequitas, owned by Canadian financial players including Royal Bank of Canada and some pension and mutual fund managers, declined to comment.

With trading fees in existing markets like stocks getting squeezed, exchange operators have been looking to launch new products to boost revenue.

At the same time, the investment industry is under pressure from regulators to be more transparent on fees, forcing fund companies to make their products more competitive.

In October, Invesco Canada launched what it calls platform-traded funds (PTFs), an actively managed investment vehicle with lower fees than traditional mutual funds. The instruments however, can currently only be traded within the Invesco dealer network.

One of the sources said Aequitas is working with Invesco and other partners to create a platform that would facilitate the trading of such instruments across a much wider dealer network.

Aysha Mawani, head of corporate affairs for Invesco Canada, said the fund manager was working with a third party to help bring its PTFs to the wider market, but declined to name the party.

"We are expecting an announcement of this new technology platform next week," she said.

Separately, the TMX, which operates the Toronto Stock Exchange, has invited members of the mutual fund industry to a gathering on Wednesday to discuss how they can "work together to meet the industry's evolving needs."

A document seen by Reuters stated the TMX is creating a working group that will "foster cross-industry collaboration" in the development of the platform, and the working group will be holding meetings over the next three months.

The document indicated the exchange operator is working on an offering dubbed TSX NAVex that would aim to facilitate the trading of some actively managed funds, but it is unclear when the offering would go live.

A spokeswoman for TMX said the company is engaging with some members of the investment community on Wednesday to swap ideas, but that it has no announcement or update to offer at this time. (Editing by Jeffrey Hodgson, Bernard Orr)

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