TMX Group plans to alter its equity trading fee schedules by introducing a measured rate reduction program for the TSX, and TSX Venture and TSX Alpha exchanges.
The current maker‐taker model involves paying rebates to participants who add liquidity, and charging a fee to participants who remove liquidity. This model was introduced in Canada to increase trading liquidity, tighten price spreads and increase competitiveness.
But the model has raised concerns about market efficiency, fairness and quality. “Our maker‐taker fee optimization program is [part] of our efforts to reshape Canada’s equities trading environment,” says Kevan Cowan, president of TSX Markets, and group head of equities of TMX Group.
Rather than replace the existing program, TMX is instead introducing a program of phased reductions in maker‐taker rates. This will:
- lower dealer active trading costs gradually;
- minimize unnecessary intermediation;
- increase investor confidence; and
- allow TMX to manage the market impact of the changes.
The first phase of reductions, effective June 1, 2015, is subject to regulatory approval. Once enacted, it will differentiate between fees for interlisted and non‐interlisted securities. Thus, taker fees will be reduced by up to 34%, with an average reduction of 26% across all securities and participants. Maker rebates will be reduced by an average of 31%.
Subsequent phases of the program will be implemented in six- to nine-month intervals over the next two years, and future rate adjustments will be determined based on research and client feedback.
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