TSX Inc. is planning a series of changes to bolster dark trading on its exchanges, and the stock exchange company is seeking to introduce a new order type to its opening auction.
According to regulatory notices published in Thursday’s OSC Bulletin, TSX is seeking regulatory approval for several changes to enable a wider range of dark trading strategies. The TSX says it is looking to enhance its current on-book dark offering “in response to customer demand, in recognition of the continued evolution and growth of dark trading in Canada, and to remain competitive with the offerings of other marketplaces.”
The proposed changes include:
> introducing several new dark pegged order types;
> adding a “seek dark liquidity” feature to ensure that “an incoming active order will execute only against resting orders that are dark”;
> modifying its current minimum quantity (MinQty) functionality to “make it more consistent with the similar feature offered by other markets”;
> introducing a new feature called “minimum interaction size,” which aims to “address participant concerns around potential information leakage when executing dark orders against small-sized contra-side orders”;
> and introducing new ways for users of iceberg orders to “obscure the presence of their iceberg order by providing an option to randomize the refresh size.”
Additionally, the TSX is seeking to enhance its current opening auction by introducing a new “limit on open” order type that will “trade in the opening auction, with any unexecuted portion being cancelled immediately before the commencement of the continuous trading session.”
The TSX says that the proposed new order type “will provide additional options for participants to manage their opening orders by specifying that the order is to participate only in the opening auction, subject to its indicated limit price.”
Both sets of proposed changes are out for comment until May 29. They are expected to become effective in the third quarter.