subject: Move Over Tsx, There's A New Option In Town [print this page] For 157 years the TSX has enjoyed the near monopoly status as the place to buy and sell stocks in Canada as it currently sits as the sixth largest in the world. Lately, there have been options moving in, eroding the TSX's monopoly. These alternative trading systems such as MATCH Now, Chi-X, Omega, Pure Trading, Instinet and Alpha Group have arrived on the scene with varying degrees of success. In some markets, these new players make up more than 40 percent of all trading activity in Canada.
Currently, Alpha Group seems to be the biggest threat to the existing TSX. In February, the TSX's market share of all trading in Canada decline to 71.9 per cent compared to 93.1 per cent at this time last year. Alpha, on the other hand, has seen its share increase to 21 percent from 3.3 per cent during this same period. Major Canadian banks and other large financial institutions formed alpha in 2007. They've been successful in obtaining a large part of the market due mostly to decreased fees.
The TSX is parented by TMX Group Inc. who essentially has three businesses. The listings business where companies who want to have access to investors pay TMX fees to have their companies listed. They also provide trading data and historical marketing activity data to clients who, in turn, pay subscriptions fees for this information. As well, they are in the trading business, where brokerages pay fees to buy and sell securities.
For now, Alpha does not have much interaction with individual consumers. However, on April 22, Alpha filed papers with the Ontario Securities Commission to become a listings exchange. If approved, this would make them a full competitor to the TMX Group who has always competed with new entrants across each of its business units. Major companies trade on the main market that is reflected in the S&P/TSX composite index, while smaller start-ups are typically listed on the TSX Venture Exchange, which TMX also owns.
Alpha is owned in part by Canaccord Capital as well as the investment branches of Canada's six largest banks. Having multiple stock exchanges would move Canada closer to the U.S. system where as many as seven separate stock markets are available for listings. The two giant New York based traders the Nasdaq and New York Stock Exchange still dominate the market. Having money to invest in the stock markets is a great way to secure a future nest egg. It often does not take a lot to make a lot.
