TORONTO (Reuters) - Canadian exchange operator Aequitas Innovations Inc unveiled a plan on Thursday to launch a new platform that will enable some actively managed mutual funds to be traded and settled with the same ease as publicly listed stocks and exchange-traded funds.
The plan, first reported by Reuters last week, will let investment advisers in Canada trade so-called Platform Traded Funds, or PTFs, that were first launched by Invesco Canada last month.
PTFs are actively managed investment vehicles with lower fees than traditional mutual funds. The instruments can, however, currently only be traded within the Invesco dealer network.
Aequitas’ new PTF Connect platform, which is set to launch in the first quarter of 2016, will help facilitate the trading of such instruments across a much wider dealer network.
The move comes as the investment industry is under pressure from Canadian regulators to be more transparent on fees, forcing fund companies to make their products more competitive.
At the same time, as trading fees in existing markets such as stocks being squeezed, exchange operators are looking to launch new products to boost revenue.
The Chief Executive of Aequitas, which is owned by the Royal Bank of Canada (RY.TO) and some pension and mutual fund managers, said he sees the PTF Connect platform in time accounting for over 10 percent of the company’s revenue.
“This can become an important component of our own revenue flow and it is a win-win for everyone,” said CEO Jos Schmitt, in an interview.
He added Aequitas, which just launched its NEO exchange in March, has already begun to see gains in trading flows on NEO and that it was also making major progress in attracting its first listings.
Separately, Invesco said it sees retail investors benefiting from PTFs, as it will give them access to active management at prices comparable to those paid by institutional investors.
Sources last week told Reuters that TMX Group Ltd (X.TO), which operates Canada’s dominant Toronto Stock Exchange and TSX Venture Exchange, is working on an offering to rival the upcoming Aequitas PTF Connect platform.
TMX last week invited members of the mutual fund industry to discuss how they can “work together to meet the industry’s evolving needs.”
A document seen by Reuters stated the TMX is working on an offering dubbed TSX NAVex that would aim to facilitate trading of some actively managed funds. It is unclear when the offering would go live.
Reporting by Euan Rocha; Editing by Bill Rigby