TORONTO (Reuters) - A new Canadian stock exchange set to launch in late March will offer attractive fees for market data or waive them altogether in a challenge to the dominance of TMX Group’s (X.TO) Toronto Stock Exchange (TSX).
Aequitas Innovations Inc said on Wednesday its Neo exchange will not charge retail investors for access to real-time displayed market data for securities listed on the primary and TSX Venture exchanges.
It will waive those fees for professionals trading on the Neo exchange until it reaches a 5 percent market share, and will give away market data for Neo-listed companies.
“There is a current stranglehold on the dissemination of trading information in Canada and it has resulted in prohibitive and virtually monopolistic pricing,” Aequitas Chief Executive Jos Schmitt said in a statement.
He said this prevents many Canadian retail investors and their advisers from seeing in real time the full picture of what is happening in the markets.
Aequitas said Canadian retail investors pay more than four times than their counterparts in the United States.
Tom Caldwell, chairman of rival platform Canadian Securities Exchange, said Neo’s move is interesting as it attacks data fees, one of the last high margin areas for exchanges, at a time when trading fees are under pressure from growing competition.
“Jos is a smart guy, he’s going to innovate and he’s going to come up with innovative ways to increase Neo’s market share,” said Caldwell. “Price is one way. I’m not convinced it will be a world beater for Neo, but it sure is innovative.”
TMX played down the threat posed by Neo’s move and said it provides bid-ask pricing for each and every security listed on its markets and offers the broadest coverage of pricing of any marketplace in Canada, while its rivals cover only a small subset of price discovery for only the most liquid securities.
The TMX also said that investors can subscribe to real-time data direct from TSX for just $6 per month.
The Neo exchange will launch on March 27 and begin listing companies in mid 2015.
Aequitas - a Latin term denoting fairness and the origin of the English word equity - is backed by Royal Bank of Canada (RY.TO), Barclays (BARC.L), pension funds OMERS and PSP, mutual fund managers CI Financial Corp (CIX.TO) and IGM Financial Inc (IGM.TO), and Investment Technology Group Inc (ITG.N), among others.
Reporting by Alastair Sharp and Euan Rocha; Editing by Andrew Hay and Steve Orlofsky