Chi-X Canada Gets OK for New Market-on-Close Order Type

Canadian buyside traders are about to get a new order type – and not from market Goliath TMX Group.

Chi-X Canada, a rival trading system toTMX, has announced it has received regulatory for a Market-On-Close order type.

This segment of the market is dominated by TMX Group, where upwards of 65 to 70 percent of all Canadian equity trading takes place. With another venue offering the=is order type, Chi-X looks to grab volume it would normally lose to its largest competitor.

Also, one more order type and destination can help lower the cost of trading in the Great North.

How does it work?

Chi-X Canada will accept unpriced MOC orders from 8:30am until the matching time just shortly before 3:40pm. These orders are fully hidden and may be canceled any time before the match occurs. Order matching will follow broker-time priority. Subscribers will be given the option to have any unmatched volume routed to the MOC facility of the listing exchange or have it canceled back to them.

“The MOC has been without viable competition for a long time and is currently priced over twice as high as similar orders in other jurisdictions,” said Dan Kessous, chief executive of Chi-X Canada. “There is no doubt that we can offer competitive pricing that will have an immediate benefit to the trading community and bring liquidity back into the market.”

Like in the U.S. equities market, the best liquidity in the marketplace can be had during the market open and close. Thus, the Chi-X order type is being well received by the nation’s traders and participants.

“A smooth functioning closing auction is extremely important to the health and stability of Canadian equity markets. While improvements and enhanced functionality continue to be made to the legacy closing auction, we believe that competition can only help to speed these to production,” said National Bank Financial in a prepared comment.

The Canadian Security Traders Association, one of the country’s equity market regulators also said it was in favor of the new order type as it would not only promote cost savings for traders but also help aid in price discovery.