Royal Bank of Canada is leading a group of investors and brokers creating a Canadian stock exchange to compete with TMX Group's Toronto Stock Exchange.
The new bourse, to be run by a venture called Aequitas Innovations, is also backed by Barclays, CI Investments, IGM Financial, ITG Canada and PSP Public Markets, according to a statement Tuesday. The group will file an application to regulators by the end of the year.
The group plans to challenge “certain predatory high-frequency-trading strategies which have impacted the quality of existing equity markets,” said Greg Mills, chairman of Aequitas and co-head, global equities, at Royal Bank's money management unit. “Marketplaces in Canada and around the globe are increasingly out of sync with their traditional users as they attract and cater to volume and revenue-generating trading over traditional investors and true market makers.”
High-frequency-trading uses computer algorithms to execute small trades in less than a second, and the new exchange will seek to limit these strategies, according to the statement.
The new bourse will be led by CEO Jos Schmitt, the former head of Alpha Group, the exchange bought by a dozen banks and pension funds that now own TMX.