Alpha platform set to launch in September

Investors have been given their first glimpse of the bank-owned market platform, Alpha Alternative Trading System (ATS), which is set for launch in September.

There are a number of ATSs in Canada, but Alpha has been hotly anticipated because of the names involved in its creation. The project was announced in May 2007 by nine of Canada’s largest financial institutions, with the aims of increasing the country’s equity trading efficiencies and making the Canadian marketplace more globally competitive.

Its ownership group consists of BMO Capital Markets, Canaccord Capital, CIBC World Markets, CPP Investment Board, Desjardins Securities, National Bank Financial, RBC Capital Markets, Scotia Capital and TD Securities.

The company also announced the fee structure it will adopt for trading, data and trade-through management (TTM) services.

“The fact that very competitive trading fees will be charged to all participants without differentiation, based on the size of the dealer firm or its trading volumes, and the fact that no fees will be charged for the TTM services, will allow trading to take place on a level playing field basis for all dealers and will provide considerable benefits to the industry as a whole,” says Alpha CEO Jos Schmitt.

Schmitt also announced that Alpha will provide its market data without charge until such time as Alpha achieves its goal of controlling a 20% share of trading volume in Canada.

“The industry should not be bearing a cost for market data until critical mass has been achieved,” Schmitt says. “Alpha has a mandate to provide, in an efficient way, value-added services benefiting Canada’s capital markets and helping strengthen its position on the international scene.”

Last month, Alpha announced an agreement to use Q9 Networks to provide the ATS with a comprehensive managed IT infrastructure solution.

Q9 Networks will provide Alpha with redundant and geographically diverse data centres to house Alpha’s production, testing and disaster recovery hardware and software trading solution. Cinnober Financial Technology AB, a Swedish technology provider, is supplying the trading platform technology.

Whether Alpha can make much of splash remains to be seen. The trading landscape in Canada has changed to a degree since the announcement of Alpha’s creation last year — most significantly, the merger between the country’s two largest stock exchanges, TSX Group and the Montréal Exchange. Not only will Alpha be competing with the scale of that new company, but the TSX Group lowered some fees and introduced a new trading engine earlier in the year.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com