TMX has launched AlphaX US, an alternative trading system (ATS) for US equities. The group enters a crowded battleground, as a growing number of ATSs compete for market share.
TMX’s plan to launch an ATS in the US has been in motion for a number of years, Heidi Fischer, president of TSX Alpha US told Global Trading. “Thinking about how to expand into global markets, it’s hard to look further than your nearest neighbour, which also happens to be the largest wallet in the world from an equity trading standpoint,” she said.
The US ATS market is a crowded place. In the final quarter of 2024 more than half of cash equity volume was traded on alternative systems, up 6.9% year-on-year. In the same time, the number of ATSs registered with the SEC rose from 73 to 76. Demand for off-exchange trading is growing, and firms are launching services to meet it.
“We’re complementary rather than competitive with what exists in the execution quality focused ATS space today,” Fischer said, citing a number of features to the ATS that differentiate it from others in the market. “We’re a frequent auction model. It feels much like a continuous trading market while still offering some protection around the auction. We also introduced counterparty selection and segmentation into an auction mode, which is not as common.”
Execution quality is a focal point for TMX, and what it believes is its differentiator with this product launch. “We match all trades at the midpoint of the buyer and the seller, capped by the NBBO, and we match as many shares as we possibly can, giving as much price improvement as possible in every match event. We prioritise by price and then time. If we have different counterparts on either side of a trade that are willing to trade at different prices, we’re happy to print multiple executions in one match event at different prices,” Fischer shared.
All regulation NMS common stock, ETFs and American depositary receipts can be traded on the platform, with order entry starting 60 minutes prior to the open.
On trading data, TMX plans to give users feedback on how their behavioural changes on the venue could improve outcomes. “We’re building out the ability to go to partners and say, ‘if you had traded with slightly different parameters, here’s what that would have looked like’,” Fischer explained.
Once enough trading data has been gathered, the company also aims to tiered customisation for users. “In today’s world tiering is a bit of a one-size-fits-all dynamic,” Fischer noted. “We’re going to allow participants to customise the time periods that they care about for mark outs, to focus on the performance metrics that matter to them.”
©Markets Media Europe 2024
