Alternative Trading Systems: Marketplace evolution in Canada
In Canada, prior to the proliferation of (Alternative Trading Systems (ATSs), a security was generally traded on a centralized exchange. As ATSs proliferate, buyers, sellers and their agents have a growing range of options when deciding where and how to execute a trade. ATSs compete with each other and with traditional exchanges by offering, among other things, different operating models, trade types and fee structures. The competition and innovation that are stimulated by the rise in multiple marketplaces also create complications. Regulators must grapple with how to regulate these electronic alternatives to traditional exchanges; registrants (brokers, dealers and advisers) must grapple with how to fulfill their duties to clients and other regulatory obligations in the face of multiple marketplaces; and investors need to be able to understand the available options and the opportunities or pitfalls that they represent.
Yesterday, my colleague Simon Romano and I hosted a breakfast seminar at which we discussed the new world of multiple marketplaces in Canada, including how the multiple marketplace environment is regulated and the challenges faced by regulators. The seminar canvassed issues stemming from the proliferation of alternative trading systems and what this new multiple marketplace reality means for securities trading in Canada. These included issues related to ATS operations, such as dark pools and dark orders, as well as the ramifications for marketplaces and dealers with respect to their best execution, trade-through and other obligations. For those of you that weren't able to make the seminar, please find the slides below.
