Alternative trading system Alpha ATS LP is seeking to introduce dark orders to its trading facilities.

According to Friday\u2019s OSC Bulletin, Alpha is looking to introduce a set of new order types that would allow its subscribers to seek matches within their firm without pre-trade transparency, with guaranteed price improvement for active orders. It says the new facility will give subscribers \u201cthe opportunity to minimize market impact and take advantage of guaranteed price improvement.\u201d

The bulletin notes that Alpha has received requests for this facility from its subscribers, and discussions have been held with subscribers to refine its requirements and to review feedback from the regulators.

\u201cAlternatives considered focused on the interaction between dark orders and the [central limit order book], price improvement variables, and sub-penny pricing,\u201d it says. Comments are due by Aug. 16, and the firm plans to introduce the new orders in the fourth quarter.

\u201cIt is our intent to stay at the forefront of innovation in Canada,\u201d noted Jos Schmitt, CEO of Alpha Group. \u201cThis facility will allow dealers to provide clients, who have tradable orders, with a trade price better than the [national best bid & offer] of all transparent marketplaces in Canada. Furthermore, the fees that Alpha ATS will charge for using this facility will be considerably below any of the fees currently applied by any of the marketplaces operating in Canada including Alpha.\u201d

Regulators have been studying the emergence of dark pools and dark orders in Canada over the past few years. They issued a consultation paper on the subject last year, and held a public forum to discuss it earlier this year. Regulators are working on a number of possible initiatives to address associated market structure issues.

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