Canadian Exchange operators clash over market data fees

Tue Dec 8, 2015 1:09pm EST
 
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TORONTO Dec 8 (Reuters) - Canadian exchange operator Aequitas Innovations alleged on Tuesday that rival TMX Group was abusing its market dominance to overcharge for data, and said it has filed a complaint with the Canadian competition watchdog seeking an investigation.

Toronto-based Aequitas, which operates the newly minted Neo Exchange, said it believes TMX is using its dominant position to maintain control over pricing of data in Canadian capital markets.

"In the area of market data, we believe the TMX has remained, in effect, an unfettered monopoly, leveraging its market power to charge prohibitive and monopolistic prices," Aequitas CEO Jos Schmitt said in a statement.

Aequitas contends that the prohibitive cost of data has hurt Canadian investors and publicly listed companies.

In response, the TMX in an email said it operates within all applicable laws and is confident it can fulfill its role within Canada's regulatory framework.

"We charge competitively for market data, commensurate with the value of the products and services TMX provides to clients," said TMX, which operates the dominant Toronto Stock Exchange and the TSX Venture Exchange.

In Canada, each trading platform can set its own fees for trading data, unlike the United States, where markets pool such data and brokers and other market players pay a fee for the consolidated pool. The different U.S. venues then split the fees based on their market share of trading volumes.

Aequitas wants to shake up the market data space by pooling such data directly from dealers rather than relying on trading venues. It contends this would give market participants a more holistic picture of trading activity in Canada for a much lower cost.

The company however claims TMX is stymieing its plans by refusing to allow investment dealers to contribute their own private market data. It says TMX's data service agreements with the dealers in Canada prevent these dealers from sharing even their own internal data on their own trades with Aequitas.

The complaint was filed with the Competition Bureau, an independent law enforcement agency that ensures businesses operate competitively. (Reporting by Euan Rocha; Editing by David Gregorio)