Ontario’s securities regulators are seeking to suspend the registration of alternative trading system (ATS) operator Omega Securities Inc., alleging that compliance deficiencies in the firm’s market data reporting are hampering oversight.
The Ontario Securities Commission (OSC) will hold a hearing on Nov. 17 to consider an application from OSC staff seeking an order suspending Toronto-based Omega’s registration and requiring it to cease trading for a period to be decided by the commission.
According to the application, OSC staff are concerned that Omega’s trading venues, Omega ATS and Lynx ATS, “may have failed to comply” with the trading rules due to: time stamp deficiencies; discrepancies in OSI’s data feeds; inaccurate identification of brokers participating in certain transactions; and the firm’s provision of market data to certain subscribers before sending it to the TMX Information Processor.
The allegations have not been proven. Omega intends to “vigorously oppose” the application for a temporary order, the company says in a statement.
“Omega firmly believes that its trading systems operate with integrity and have offered a valuable service to the market for approximately 10 years, and that its market data is distributed in a fair and orderly fashion,” says Sean Debotte, president and CEO of Omega, in a news release. “None of Omega’s market participants are being disadvantaged or treated unfairly in any way whatsoever.”
Its systems are operating in compliance with the trading rules, Omega contends, and it “has been fully co-operating with the OSC in a year-long investigation relating to the capture and dissemination of the date and time of trades,” on its ATSs, the company says.
“The company is very surprised at the severity of the action sought by the OSC, given the lack of any identified adverse effects to the Canadian capital markets, and in fact the almost certain harm to pricing spreads that would result from the OSC’s proposed course of action,” Omega adds. “Omega strongly opposes the course of action taken by the OSC, which it believes is very unfair, and intends to vigorously oppose these proceedings.”
In the application, OSC staff maintain that the alleged compliance deficiencies mean that Omega has failed to comply with its obligations to provide “timely, accurate and efficient disclosure of information,” and that, as a result, regulators are unable to properly protect investors, the fairness of capital markets is compromised, and investor confidence is negatively affected.
The application indicates that the investigation is continuing, but that regulators are seeking a temporary order against the firm, “to protect the public interest in light of the serious and ongoing potential breaches of Ontario securities law.”