Reg­u­la­tor re­view­ing ap­pli­ca­tion for Nas­daq in Canada

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New York-based 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, op­er­a­tor of the Toronto Stock Ex­change.

Ac­cord­ing to a post­ing on the On­tario Se­cu­ri­ties Com­mis­sion web­site, 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 Nov. 13.

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

Chi-X Canada, an al­ter­na­tive trad­ing sys­tem for the Toronto Stock Ex­change, was pur­chased by Nas­daq in Fe­bru­ary 2016. Ap­ply­ing for an ex­change li­cence was the next “log­i­cal step” for Nas­daq af­ter com­plet­ing tech­nol­ogy mi­gra­tion to Chi-X, spokesman Joe Christi­nat said in an email.

He wouldn’t say when or if the com­pany will start list­ing se­cu­ri­ties but said it is talk­ing to clients about their needs. Asked what kinds of se­cu­ri­ties Nas­daq might go af­ter, he said it lists many as­set classes in­clud­ing eq­ui­ties, de­riv­a­tives, fu­tures, com­modi­ties and struc­tured prod­ucts.

Nas­daq Canada cur­rently op­er­ates eq­uity trad­ing fa­cil­i­ties in On­tario as al­ter­na­tive trad­ing sys­tems 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 OSC ap­pli­ca­tion.

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.

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

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