The Toronto Stock Exchange (TSX) is gearing up to launch its new TSX Alpha Exchange on Sept. 21, according to a notice to exchange members.
The new exchange aims to attract traditional investors rather than high-frequency traders (HFTs) by imposing a “speed bump” on orders.
Under the new model, Alpha will set a minimum size requirement on posted orders, and it will impose a randomized speed bump of 1-3 milliseconds on orders, among other changes.
The migration of trading to the new Alpha will take place in one fell swoop on Sept. 21, the notice says, with all existing Alpha symbols (except debentures) trading on the new TSX Alpha Exchange that day. For now, debentures will not be eligible to trade on Alpha.
After the close of business on Sept. 18, all open orders on the existing Alpha will be purged, the notice says. Then, the following week, the Alpha Exchange will open at 8:00 a.m. as a market with an empty order book, operating under its new model, including the speed bump, the minimum size requirement, and odd lot auto-fills. At that point, orders on Alpha will no longer be subject to the Order Protection Rule (OPR); which was one of the conditions imposed by regulators when they approved the proposed changes.
The notice includes a table setting out the minimum size requirement for different types of securities. However, the details of the exchange’s so-called “inverted” fee model will be published closer to the launch date, once it has been approved by the regulators.
The reforms are part of a plan to reshape the equity trading landscape that was unveiled by the TSX last October. Earlier this month the TSX announced that it had received regulatory approval for its new Long Life order type on the main market, the TSX, which also aims to attract traders that aren’t seeking to compete based solely on their trading speed. That new order type is scheduled to be launched in November.