* TMX cuts fees by half for securities under C$1
* Pricing model aims to boost liquidity
TORONTO, Feb 1 (Reuters) - Toronto Stock Exchange operator TMX Group Inc X.TO said on Monday it is slashing trading fees it charges for securities worth less than C$1, its latest to defend its waning market share.
TMX, which also runs the smaller TSX Venture Exchange and Montreal Exchange derivatives market, said the change represents about a 50 percent cut. The new pricing model will take effect on March 1.
The exchange operator warned that if the lower fees don’t boost volumes they could reduce revenue by about C$15 million ($14.2 million) to C$18 million annually. This would have worked out to about 3 percent of revenue for the 12 months ended Sept. 30, 2009.
The changes are “intended to encourage higher trading volumes and liquidity, which will benefit traders, investors and listed issuers of lower-priced securities,” Kevan Cowan, president of TSX Markets and group head of equities, said in a statement.
“TMX Group is known throughout the world for operating markets that help smaller-capitalized, early-stage organizations grow.”
The new structure also eliminates the tiered pricing model that saw fees adjusted based on volumes. TMX said this will benefit both “active and passive traders in organizations of all sizes.”
The move comes after Alpha ATS, which is backed by the dealer units of Canada’s big banks and is TMX’s biggest competitor, announced fee reductions late in January that came into effect on Monday.
Public data showed Alpha had a 15 percent share of Canadian stock trading on a volume basis for the fourth quarter. TMX held just below 80 percent.
$1=$1.06 Canadian Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson