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Canada to launch alternative trading system

Date: Saturday, May 5, 2007
Author: Stephanie Baum, Financial News

Seven Canadian investment firms have clubbed together to launch an alternative trading system to rival the Toronto Stock Exchange, the latest in a string of new platforms challenging the traditional exchanges.

The new trading system is to be called Project Alpha. The seven firms behind it are BMO Capital Markets, Canacord Capital Corporation, CIBC World Markets, National Bank Financial, RBC Capital Markets, Scotia Capital and TD Securities.

Jos Schmitt, chief executive of Alpha, said it will have a continuous electronic order platform and trades will be made on a price-time basis.

"The future strength of Canadian capital markets depends on our ability to achieve the same kind of efficiencies already being realized around the world by leveraging today's technology. This new Canadian-driven trading platform is being designed to find those efficiencies, increasing both competitiveness and liquidity," said Schmitt.

In Europe, banks have backed Project Turquoise and Project Boat to increase competition with stock exchanges while in the US there are about 40 alternative trading venues set up in the past 12 months.

Canada has witnessed a surge in new trading systems in the past year. Last month the Toronto Stock Exchange and International Securities Exchange formed an electronic derivatives exchange called Dex. Canadian Trading and Quotation System, a four year old electronic auction market, is gearing up for the launch of Pure Trading which is designed to offer a faster and cheaper platform for trading Canadian listed securities. Global broker Instinet, which was recently acquired by Japanese firm Nomura, is getting ready to launch an alternative trading system later this year called ICX.

The ATS is expected to launch in 2008 subject to regulatory approvals.