Ontario regulator seeks to suspend Omega Securities
Staff of the Ontario Securities Commission is seeking an order to temporarily suspend the operations of Omega Securities Inc., an alternative trading platform that captured about four per cent of trading volume in Canada in the past four quarters.
In an application filed Monday and made public Tuesday afternoon, the regulator’s staff alleges “serious and ongoing potential breaches of Ontario securities law,” and requests that the OSC temporarily suspend Omega’s registration and cease any trading by Omega “for such period as is specified by the Commission.”
A hearing into the matter is to take place Nov. 17 at 10 a.m. in Toronto.
Omega issued a statement late Tuesday saying it will “vigorously oppose” the OSC’s temporary order.
“Omega firmly believes that its trading systems operate with integrity and have offered a valuable service to the market for approximately 10 years, and that its market data is distributed in a fair and orderly fashion,” said Sean Debotte, chief executive of Omega Securities Inc. “None of Omega’s market participants are being disadvantaged or treated unfairly in any way whatsoever.”
In the document filed by OSC staff, signed by litigation counsel Keir Wilmut, four alleged breaches of the policies that govern the platform are cited as the reason for seeking the application for a temporary suspension. These include “inaccurate identification of brokers” participating in certain transactions, time stamp deficiencies, content discrepancies across data feeds, and “dissemination of data to certain subscribers” prior to TMX Information Processor.
The filing says the “mid-point peg transaction issues” have been corrected by Omega Securities, but it is alleged that “Omega ATS and Lynx ATS continue to inaccurately record, store and disseminate information” with respect to the other items.
In failing to comply with its governing policies, OSC staff says Omega Securities has failed to comply with its obligation to provide timely, accurate and efficient disclosure of information. Without this, the document says, “regulators are unable to properly protect investors; capital markets are prevented from operating in a fair and efficient matters; and investors’ confidence in capital markets is negatively affected.”
Omega ATS began operations on Dec. 6, 2007, becoming the second venue in Canada to offer traders an alternative execution platform to traditional exchanges such as the Toronto Stock Exchange.
According to Omega Securities’s website, the trading system surpassed one million shares traded by March 2008.
It now operates two alternative trading systems, Omega ATS and Lynx ATS.
The latest market share statistics published by the Investment Industry Regulatory Organization of Canada for the period ended Sept. 30 show that the volume traded by Omega dropped in the third quarter. Still, the trading venue captured about four per cent of the volume and five per cent of the value traded over the past four quarters.
The Toronto Stock Exchange and Venture Exchange dominate with more than 57 per cent of the volume and 55 per cent of the value. But Omega’s market share isn’t far behind other trading rivals such as Alpha and Aequitas.