On­tario reg­u­la­tor seeks to sus­pend Omega Se­cu­ri­ties

Windsor Star - - CLASSIFIED - BAR­BARA SHECTER Fi­nan­cial Post

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.


The On­tario Se­cu­ri­ties Com­mis­sion are seen in Toronto. The reg­u­la­tor al­leges Omega Se­cu­ri­ties Inc. has en­gaged in “se­ri­ous and on­go­ing po­ten­tial breaches of On­tario se­cu­ri­ties law.”

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