Nas­daq ex­change ap­pli­ca­tion puts pres­sure on TSX Group

Packet & Times (Orillia) - - BUSINESS - DAN HEAL­ING Above: The Nas­daq prompter is seen in New York City. Nas­daq Canada and its par­ent com­pany En­soleille­ment Inc. have ap­plied for recog­ni­tion as ex­changes in Canada.

Nas­daq Inc. said Thurs­day it has ap­plied to op­er­ate an ex­change in Canada, a move that could bring for­eign com­pe­ti­tion to a mar­ket cur­rently dom­i­nated by the TMX Group, putting new pres­sure on the op­er­a­tor of the Toronto Stock Ex­change.

Nas­daq Canada and its par­ent com­pany En­soleille­ment Inc. have ap­plied for recog­ni­tion as ex­changes in Canada, start­ing the clock on a 30-day com­ment pe­riod to close on Nov. 13, ac­cord­ing to a post­ing on the On­tario Se­cu­ri­ties Com­mis­sion web­site.

The Nas­daq ap­pli­ca­tion comes more than a year af­ter the com­pany com­pleted its ac­qui­si­tion of Chi-X Canada, an al­ter­na­tive trad­ing sys­tem for the Toronto Stock Ex­change, in Fe­bru­ary 2016.

Nas­daq Canada cur­rently op­er­ates three eq­uity trad­ing fa­cil­i­ties in On­tario, as well as NFI, a fixed in­come fa­cil­ity that al­lows per­mit­ted clients to trade U.S. trea­suries on a U.S.-based al­ter­na­tive trad­ing sys­tem (ATS).

It says in its ap­pli­ca­tion that its Cana­dian units act as al­ter­na­tive trad­ing plat­forms for TMX’s Toronto Stock Ex­change and TSX Ven­ture Ex­change list­ings, with 66 sub­scribers and trad­ing of­fered in 4,100 se­cu­ri­ties.

“Nas­daq Canada will tran­si­tion its mar­ket op­er­a­tions from those of an ATS to those of an ex­change, with no sub­stan­tial changes to its cur­rent trad­ing plat­form or op­er­a­tions,” it says in its ap­pli­ca­tion.

“Func­tion­al­ity cur­rently in place to sup­port the Nas­daq ATS trad­ing plat­form will con­tinue to be avail­able af­ter the recog­ni­tion date ... Nas­daq Canada will op­er­ate a con­tin­u­ous auc­tion mar­ket Mon­day through Fri­day, ex­clud­ing Cana­dian bank­ing holidays.”

Nas­daq is not cur­rently propos­ing to list is­suers’ se­cu­ri­ties and, if it de­cides to do so later, its list­ing rules would have to be re­viewed, pub­lished for com­ment and pre­sented to the com­mis­sion for ap­proval.

Richard Car­leton, CEO of the al­ter­na­tive Cana­dian Se­cu­ri­ties Ex­change — one of the few ex­ist­ing com­peti­tors to the TSX — said he doesn’t think much will change in the short term be­cause Nas­daq is not ini­tially ap­ply­ing to pro­vide list­ing ser­vices.

“With their ap­par­ent de­ci­sion not to pur­sue list­ings at this time, it’s not clear that there will be an im­me­di­ate im­pact on the com­pet­i­tive land­scape for trad­ing ser­vices,” he said in an e-mail on Thurs­day.

“They are a well-re­spected in­ter­na­tional ex­change op­er­a­tor; as time goes on we would ex­pect to see an even more com­pet­i­tive mar­ket.”

The CSE was rec­og­nized as a stock ex­change in 2004 and now lists more than 300 com­pa­nies, about one-tenth the amount listed on the TSX and TSX ven­ture ex­changes, which had a to­tal of 3,142 list­ings as of Aug. 31.

Mau­reen Jensen, chair and CEO of the On­tario Se­cu­ri­ties Com­mis­sion, said Thurs­day staff at Canada’s big­gest se­cu­ri­ties reg­u­la­tor have re­viewed an ap­pli­ca­tion by Nas­daq to op­er­ate a stock ex­change in Canada but it hasn’t yet come be­fore the board.

She said she ex­pects the OSC to con­sider the ap­pli­ca­tion at one of its up­com­ing meet­ings.

TMX Group CEO Lou Ec­cle­ston said the com­pany will re­view Nas­daq’s ex­change ap­pli­ca­tion.

“The scope of our re­view, as it is in all such mat­ters, is to en­sure Canada’s mar­kets re­main fair and ef­fi­cient and op­er­ate in the pub­lic in­ter­est,” he said in a state­ment.

“TMX’s pri­mary fo­cus re­mains fixed on solv­ing chal­lenges for clients across our mar­kets and con­tin­u­ously striv­ing to add value to the prod­ucts and ser­vices we pro­vide.”

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