TMX Group Inc. today announced a series of changes to its fee schedule for equity trading, as well as a new electronic liquidity provider (ELP) incentive program for Toronto Stock Exchange (TSX).

TMX Group says these changes are intended to enhance trading activity and liquidity on TSX and TSX Venture Exchange and to provide cost savings for all marketplace participants.

Changes to the equity trading fee schedule are a continuation of TMX Group’s ongoing efforts to incent liquidity providers and reduce the overall cost of trading Canadian equities.

The fee schedule changes, effective Jan. 1, 2009, will increase liquidity-providing credits for all market participants and reduce the spread between the active fee and passive credit for 90% of market participants.

Registered market makers, including exchange traded fund (ETF) market makers, also benefit from a guaranteed $0 fee cap per trader and increased liquidity-providing credits, TMX Group says.

Furthermore, revised pricing models for ETF trading, “specialty priced crosses”, and “must be filled” trades are based on customer feedback and will promote trading growth in these areas, the group says.

It is expected that the impact of the proposed changes will be to improve TMX Group’s competitive position in North America.

Based on historical trading activity, patterns and product mix, changes to the trading fee structure could reduce trading fees by approximately $11 to $14 million on an annual basis if offsetting benefits, including increased volumes, are not realized. However, actual trading fees will depend on future trading activity, patterns and product mix, TMX Group says.

The ELP program offers fee incentives to experienced high-velocity traders using proprietary capital and passive electronic strategies on the TSX Central Limit Order Book.

“We are confident that the participation of ELPs will benefit investors, traders, and issuers alike by tightening spreads, reducing friction costs and increasing overall turnover,” says Robert Fotheringham, senior vp, trading.

IE