The company behind one of Canada's newer stock exchanges is pushing provincial securities regulators to ensure that all investors have access to real-time consolidated market data.
In a recent filing to the Canadian Securities Administrators, Aequitas Neo Exchange Inc. contends that most retail investors and their investment advisers have a partial view of the trading activity that occurs in stocks listed on the Toronto Stock Exchange and the TSX Venture Exchange.
Most retail brokerage accounts display information about a stock, including price and volume traded, based on what has taken place on the TSX and TSX-V. That can be problematic because both stocks and exchange-traded funds can trade on a dozen other venues in Canada, such as those operated by Nasdaq Inc. and Aequitas, among others.
While trading platforms offer access to data from other markets for an additional fee, Aequitas says most retail investors in Canada don't subscribe to other feeds because of the costs. But without a more complete view of market activity, Canadians risk making uninformed investment decisions, its letter states.
"People don't have access – and don't even know that they don't have access – to all the data about what's happening in the markets," Jos Schmitt, chief executive officer at Aequitas, said in an interview. "Now, it's time for the regulators to step up to the plate."
The provincial securities regulators require markets to make all trading-activity data available to dealers. They also approve how much dealers can be charged for the data. The regulators have spent time analyzing these fee structures, which have been criticized by market participants for being too costly. But how dealers choose to distribute the market data to their clients is up to them.
"We are currently discussing the specific issues raised by Aequitas with our CSA colleagues," said Susan Greenglass, the director of market regulation at the Ontario Securities Commission.
It isn't just certain investors or trading venues that are being affected by the data gap.
"This is a daily frustration for us," said Som Seif, the CEO at Purpose Investments Inc., a Toronto-based investment firm with $2.8-billion in assets that offers ETFs. "If a product of ours trades 50,000 shares but most of our clients see 5,000 shares, they think there's no success there or it's not trading well. But it's not just us. It's every ETF or company's stock."
Aequitas, which is backed by a consortium that includes Royal Bank of Canada, is renewing this fight over market data that it first waged years ago, but is changing its approach.
In 2015, Aequitas filed a complaint with the Competition Bureau alleging that TMX Group Ltd. engaged in anti-competitive behaviour and submitted a proposal for an alternative product that it wanted to sell to brokers instead. Late last year, the bureau said it did not find evidence to support Aequitas's claim.