Pure in third, TMX Group searches for new customers

2010-04-12 20:53 ET - Street Wire

by Stockwatch Business Reporter

During the week ended April 9, 2010, Canada's top four trading alternative systems -- Pure Trading, Alpha Trading Systems, Chi-X Canada and Omega ATS -- handled 26.9 per cent of stock trading in Canada, which includes all listings on the Toronto Stock Exchange, the TSX Venture Exchange and the Canadian National Stock Exchange. The most active ATS was Alpha which traded an average of 214.9 million shares per day, a new record. In second was Chi-X with an average of 33.79 million shares per day, followed by Pure Trading with 10.6 million. Omega traded an average of 3.5 million shares per day.

Last week the TMX Group published its trading statistics for March, 2010. For TSX listings, it handled a total of 408.7 million shares traded per day, down from the March, 2009, average of 484.4 million shares per day, or 15.6 per cent. On the up side, trading on the TSX-V soared to 260.8 million shares per day from 122.8 million in March, 2009, a jump of 90 per cent. The problem for the TMX is more happiness flows to the exchange when pricier stocks trade. For stocks over $1, the TMX bills the active side (the buyer) between 0.33 of a cent and 0.35 of a cent per share, depending on volume, and it rebates the passive side (the seller) between 0.31 of a cent and 0.32 of a cent per share, depending on volume. As for stocks under $1, it charges the active side 0.03 of a cent per share and rebates the passive side 0.01 of a cent per share.

With the rise of Alpha, the TMX's chief competitor which is owned by Canada's big banks and Canaccord Financial Inc., the TMX is searching for new customers and new ways to make money. Last week the TMX's chief executive officer, Tom Kloet, and senior vice-president, Robert Fotheringham, were in Shanghai and Beijing to promote Canada's capital markets and develop ties with Chinese regulators. The exchange hosted what it called the Capital Markets Summit on Global Canadian Resource Markets. They focused on educating investors who are interested in accessing the Canadian capital markets. Mr. Kloet said, "We are committed to further developing and enhancing our partnerships in China as we go forward." Mr. Fotheringham added, "Given that we've had the great success of attracting Chinese companies to come and list on the exchange, the next natural step is to attract Chinese money into the Canadian marketplace." As of February, 2010, there were 52 Chinese companies on the TSX and TSX-V combined. The TMX is hoping to earn more money from Chinese companies through listing fees.

The TMX also recently announced a loyalty program in hopes of increasing trading volume for TSX stocks. If its customers have a monthly volume equal to or greater than 250 million shares and they conduct at least 80 per cent of all trading with the TMX, they will qualify for the cheapest active fee for stocks over $1, 0.33 of a cent per share, as well as the highest-paying passive side rebate per share over $1, 0.32 of a cent per share.

The TMX is not the only exchange looking to Asia for new sources of revenue. Chi-X Canada's parent, Chi-X Global, has launched Chi-X Japan KK which in July will begin trading stocks listed on the Tokyo Stock Exchange. There are already six ATSs in Japan. Chi-X Global says success in Canada and Europe has impelled the company to launch exchanges in Australia, Singapore and now Japan.