A variety of modifications are coming to the Canadian trading landscape, with fee changes, new order types, and rule changes on the horizon.

The alternative trading system Alpha Group announced that subject to regulatory approval, it will implement a new trading fee structure on Feb. 1. The new regime will see the ATS reduce active fees and raise passive fee rebates for low-value securities (priced under $1). Alpha says the move positions it as the market with the lowest active fees in low value securities (a segment that represents about 40% of the overall volume traded in Canada).

“For a dealer posting all resting orders on Alpha and preferencing Alpha on the active flow, this new fee schedule combined with free opening trades on Alpha, represents potential savings of 50% to 70% as compared to trading on other exchanges in low value securities,” it says, adding that the actual savings will depend on the monthly volume and active/passive ratio of each dealer.

Alpha is also announcing a new billing facility that will be available as of March 1.

“We are committed to reducing the cost of trading in Canada,” said Jos Schmitt, CEO of Alpha Group. “Listening to our various constituents — retail brokers, those dealers focused on TSX-V listed securities and many others — it became very clear to us that immediate action was required in the low value securities. The volume that these securities represent, combined with the relative weight of the fees versus the value of the securities, was generating tremendous pressure on profitability.”

Additionally, Alpha is proposing to introduce a new passive only order type, allowing the acceptance of odd lot orders on exchange-listed debt instruments, and changes to the bypass cross functionality. A copy of the notice was published in Friday’s Ontario Securities Commission bulletin. The proposals are out for comment until Feb. 18.

Alpha’s chief rival, TSX Inc., is also proposing to introduce two new order features: a post only order feature, and a self-trade prevention order feature. A notice, describing the two new order features, was also published in the Friday’s OSC Bulletin. Comments on that proposal are due by Feb. 17.

Friday’s OSC Bulletin also reports that Ontario’s Minister of Finance has approved amendments to the trading rules, including the prohibition on locked and crossed markets, and an update of systems requirements applicable to marketplaces that will come into force in Ontario on Jan. 28. The amendments related to the Order Protection Rule will come into force on February 1, 2011.

A staff notice from the Canadian Securities Administrators that outlines expected milestone dates regarding the implementation of the Order Protection Rule will be published shortly, it says.

IE