Jos Schmitt, centre, president and CEO of Aequitas NEO Exchange, receives a congratulatory handshake at the launch of the alternative stock exchange Aequitas NEO Exchange in Toronto on Friday, March 27, 2015. THE CANADIAN PRESS/Darren Calabrese
Republished March 27, 2015 - 9:58 AM
Original Publication Date March 27, 2015 - 1:05 AM
TORONTO - The Aequitas Neo Exchange, a new stock market aimed at deterring high-frequency trading strategies, celebrated its launch on what was once the trading floor of the Toronto Stock Exchange.
"This building at one stage was the heart of the capital markets in Canada," Michael Wilson, a former federal finance minister and a member of Aequitas Innovations Inc.'s board, said Friday at the Design Exchange on Toronto's Bay Street.
Wilson told his audience they were on a floor once filled with "the hustle and bustle of traders and runners going back and forth."
Aequitas, named for the Latin word for equality and fairness, hopes to rival the Toronto Stock Exchange and other markets owned by the TMX Group (TSX:X).
"Because we're trying to bring back the role of the stock exchange back to the original objective — of bringing buyers and sellers together in the simplest way possible — there is some real symbolism that we've been trying to capture by being here," Wilson said following the celebration of the market's first trade.
The exchange launched with 45 TSX-listed stocks. Over the coming months it will roll out more securities, before launching its own listing service.
Greg Mills, Aequitas chairman and the head of global equities at RBC Capital Markets, says he's hopeful the new exchange could capture 15 to 20 per cent of the market in a couple of years.
"This won't happen overnight," Mills said. "This is a slow, gradual build. You get momentum, you get support ... It takes time. We're not going to wake up and all of a sudden find that Aequitas is 50 per cent of the market."
Royal Bank (TSX:RY) is among the supporters of the Aequitas Neo Exchange, along with U.K.-based Barclays banking group, Canadian pension fund PSP Investments, telecom BCE Inc. (TSX:BCE) and several brokerages.
Aequitas has said it plans to use high fees and a time delay to deter high-frequency trading (HFT) strategies, which have been criticized for leaving traditional investors at a disadvantage.
These practices have been blamed for inserting artificial volatility into the markets by using superfast computers to engage in activities such as exploratory trading, or making small orders to see if there is interest in a stock.
The computers can also engage in up to 5,000 trades per minute, clogging bandwidth and delaying trades by ordinary investors.
The new exchange aims to level the playing field, said Mills.
"To me this represents an innovative and disruptive solution to the existing system that challenges the bully in the playground, and it seeks to establish fair balance for all market participants," he said.
News from © The Canadian Press, 2015