Aequitas Innovations Inc. ("Aequitas") is pleased to announce that it will proceed with the implementation of a new Canadian stock exchange, as well as a centralized platform for private securities focused on capital raising and liquidity for small and mid-sized issuers.
The exchange application will be based on the key features Aequitas published in 2013, including a number of amendments that resulted from an extensive dialogue and a comment process initiated by the Ontario Securities Commission ("OSC").
"We are very enthusiastic to begin building our new solutions for Canada's capital market as we believe they will be true game changers," stated Jos Schmitt, CEO, Aequitas Innovations Inc. "We are very thankful to the industry and the regulators for all their feedback. Their engagement led us to a series of amendments which will allow us to even more effectively deliver on our mandate to build innovative solutions, create meaningful choice and competition, enhance market fairness by curbing predatory high frequency trading, and address capital raising issues."
In August 2013, the OSC published for comments a number of key features of the intended Aequitas offering. Based on the comments received and related dialogue with both industry participants and the OSC, Aequitas believes that its amended proposal not only meets the current regulatory framework requirements but strengthens its value proposition for the industry, with the following amendments:
- The mechanism to identify predatory high frequency trading strategies will be refined to ensure it will not be impacted by the potential abuse or other shortcomings of the Short Marking Exempt ("SME") regulatory marker;
- The mechanism to prevent predatory high frequency trading strategies from taking liquidity in the Hybrid book will be replaced by a mechanism that will, rather than restrict access, make these strategies uneconomic through a combination of trading fees and speed-bumps;
- Execution priority of designated market makers, designed to reward their commitment to provide reliable liquidity, will be capped to avoid the potential risk of 'crowding out the quote'; and
- Clients of Aequitas members with Direct Electronic Access will not be allowed to act as designated market makers.
All founding shareholders of Aequitas - Barclays Corporation, BCE, CI Investments, IGM Financial, ITG Canada, OMERSCapital Markets, PSP Public Markets and RBC Dominion Securities Inc. - have approved the Aequitas business plan and the decision to proceed with the amended offering. As Aequitas commences the implementation phase it will continue to actively engage with market participants. One of the key milestones in this phase will be the filing of the Aequitas Exchange Application with the OSC, which is planned for the first quarter of 2014. Our goal is to rollout all our services over the first half of 2015.
"We appreciate the tremendous engagement we have received to-date by a wide variety of market participants and we heard their ask for meaningful competition and enhanced fairness loud and clear. During this next phase we encourage everyone to continue to make their voice heard and influence the future of Canada's equity markets," continued Schmitt. "Our mandate will always ensure the needs of the investors and issuers are put first as we remain steadfast in our commitment to restore focus on the original purpose of an exchange - creating a fair market for all, enabling stronger companies, both small and big, and facilitating the growth of the Canadian economy."