Omega ATS plans to launch a second alternative trading system for brokers and institutions in Canada.
The new venue, to be called LYNX, will start late in the fourth quarter of this year, said Sean Debotte, director of business development at Omega.
Omega sees the new venue as a way to stay competitive and maintain market share, as the Toronto and Montreal exchanges are rolled into the TMX Maple Group along with Alpha, the nation’s first alternative trading system. TMX Group controls upwards of 67 percent of all Canadian equity trading. Also, Chi-X Canada, which already operates one ATS, got approval in late February to start a second venue, CX2, from Canadian regulators.
Alpha accounts for roughly 16.2% of equities trading. Chi-X Canada, 10.8% and Omega ATS 1.4%.
In order to differentiate itself from Omega’s primary ATS, Lynx will employ a maker-taker style pricing model for all trading activity, and the “default” attribution setting for LYNX ATS will be broker-attributed with the option to enter orders anonymously on a ticket-by-ticket basis.
In the Lynx case, makers of liquidity get paid rebates, while takers pay fees. Omega ATS, by comparison, introduced “inverted” pricing for all equities in November 2011. In that pricing model, takers of liquidity get paid rebates and makers of liquidity pay fees.
“Omega ATS subscribers who become Lynx subscribers will be able to leverage existing connectivity, or establish entirely new connections to Lynx depending on the individual needs,” Debotte said. “As a result, subscription, connectivity, and market data for this new marketplace will place no burden on subscribers.”
LYNX will launch with all the same order types and functionality of Omega ATS. Just like Omega ATS, LYNX will have no subscription fee, and will also have no connection fee, and no data fee, Debotte added. This, he said, is intended to make LYNX the cheapest equity marketplace in Canada. The venue will use trade matching technology hosted by OSI’s ThymeX matching engines. The venue will charge only transaction fees on executed trades.
All eligible orders will match within Lynx ATS according to a strict price/time priority, with the exception of intentional crosses. Intentional crosses will be granted time priority over other orders on the book at the same price level.
The Ontario Securities Commission posted Omega’s “Request for Comment” publicly in its website soliciting market feedback.
All subscribers currently subscribed to Omega ATS will be eligible to subscribe to Lynx ATS. Subscribers may opt to subscribe to either Omega ATS, Lynx ATS or both.
Omega ATS and Lynx ATS will operate separately. There isis no requirement to subscribe to both marketplaces. Subscribers, have the option of connecting to Lynx ATS through their existing Omega ATS FIX connection, through its smart order router, or connect directly to Lynx ATS only. FIX connections that are directly connected to Lynx ATS only will not be able to access Omega ATS.
