Instinet I-XSM Ltd, a subsidiary of global agency broker Instinet, today announced that it will be launching its alternative trading system in Canada by the fourth quarter.

Instinet I-X will operate ICXSM, a high-performance, fully anonymous and low-cost continuous alternative trading system for equities listed on the Toronto Stock Exchange. The new platform, in which Instinet intends to offer equity stakes to strategic liquidity partners, will begin operation in Q4 of this year, it said. The firm has also received membership in the Investment Dealers Association of Canada.

Supporting a wide array of advanced order types and based on strict price-time priority, ICX aims to provide trading efficiency and cost savings to investors and ultimately help spur market growth. ICX has an internal latency of less than one millisecond.

The system will be available to any IDA-regulated investment dealer with membership in good standing in Ontario and accessible to members through the Financial Information Exchange (FIX), ICX will disseminate market data via third-party market data vendors at no cost. Additional pricing information will be made available before its Q4 launch, it said.

“By capitalization, the Canadian equities market is the sixth largest in the world, making it an extremely attractive market for investors around the globe,” said Michael Plunkett, president of North America at Instinet. “Consequently, with ICX we intend to draw upon Instinet’s deep-rooted experience in developing and operating ATS platforms to provide a new market model, which should lead to greater price discovery, increased liquidity and improved investor performance.”

“We are confident that the Canadian marketplace is ready for an advanced platform like ICX,” said Tal Cohen, senior vice president at Instinet, in a news release. “By enforcing strict price-time priority and supporting a wide array of advanced order types, ICX should help the drive the adoption of algorithmic trading and direct market access strategies in Canada, which are helping to increase liquidity and market efficiency worldwide.”

The firm said that, according to research and consulting firm TABB Group, algorithms are used nearly twice as often in Canada today — a 97% increase from 2005 — as they were two years ago. “There is no question; the Canadian marketplace is rapidly evolving. Greater electronic trading demands a different market structure,” said Jeromee Johnson, senior analyst and consultant with the TABB Group. “With the ongoing regulatory initiatives and the competition created with the entry of new venues, it’s going to be an exciting and dynamic time for Canadian institutions.”