Leading market participants join to form new Canadian stock exchange
Aequitas seeks broad support to build innovative and cost-efficient exchange
that levels the playing field for all market participants
-- A marketplace that protects investors against predatory and
opportunistic trading strategies, and where all Canadian-listed
securities can be traded.
-- A senior listing service for companies ready for public
-- Technological solutions and fee structures to reduce the
financial burden on investors, issuers and dealers.
-- An exempt market centralized capital-raising platform to
provide early and mid-stage companies with access to capital
TORONTO, June 25, 2013 /CNW/ - Aequitas Innovations Inc. ("Aequitas") is today
proud to announce its intent to enter the Canadian capital markets by
establishing a new stock exchange that will seek to restore the original
purpose of an exchange - the efficient allocation of capital between issuers
and investors as a central force driving the Canadian economy. Aequitas was
founded by a diversified group of Canadian corporations, representing
professional money managers, pension fund managers, institutional and retail
brokers, and Canadian issuers.
With a balanced, broad and open ownership structure, the founding investors,
Barclays Corporation Limited; CI Investments Inc.; IGM Financial Inc.
(Investors Group and Mackenzie Financial); ITG Canada Corp., PSP Public
Markets Inc.; and Royal Bank of Canada, are seeking to apply innovation,
technology and competition to improve fairness and efficiency in the markets
with particular attention to the benefits of traditional investors and issuers
- the cornerstones of the Canadian economy.
The Need for Improvement
"Through Aequitas, we have a compelling opportunity to create a level playing
field for both retail and institutional investors by challenging certain
predatory high frequency trading strategies which have impacted the quality of
existing equity markets," said Greg Mills, Chairman of Aequitas, and Co-Head,
Global Equities, RBC Capital Markets. "Marketplaces in Canada and around the
globe are increasingly out of sync with their traditional users as they
attract and cater to volume and revenue-generating trading over traditional
investors and true market makers. Aequitas is designed to promote true and
reliable liquidity, and will provide an operating model more aligned with the
interests of investors and issuers to support market quality."
Aequitas believes that, while there are acceptable high-frequency trading
(HFT) practices that can contribute to market quality across a variety of
asset classes, certain predatory HFT strategies, such as latency arbitrage,
rebate arbitrage and exploratory trading, impair the quality of execution for
retail investors and for institutional investors representing the unit holders
of pension plans and mutual funds. Additionally, these strategies negatively
impact the liquidity of listed securities by discouraging true market makers,
and result in excessive costs falling squarely on investors, issuers and the
networks that support them.
"As marketplaces cater to volume, they can damage the quality of execution for
those who actually want to hold something at the end of the day," commented
Scott Penman, Vice-Chair of Aequitas and Executive Vice President and Chief
Investment Officer for Investors Group, a wholly owned division of IGM
Financial Ltd. "With assets of over $125 billion and a traded volume of
Canadian equities in excess of $25 billion in 2012, Investors Group and
Mackenzie Financial are significant long term participants in Canadian equity
markets. A new and different exchange that serves long term investors, one
that strikes the right balance between liquidity, price discovery and cost
efficiency, is very exciting for us."
Aequitas is also concerned about the impact certain trading strategies,
coupled with prevailing market conditions and the lack of innovative
solutions, have on early and mid-stage companies seeking to access capital.
New solutions, focused on making the capital formation process for small and
mid-cap companies more viable, need to be developed to nurture those companies
that will fuel the growth of the Canadian economy.
"We are at a critical crossroads for our markets and we are committed to
bringing solutions to enhance trust in capital markets, challenge the status
quo, and foster an exchange framework that will help support and grow the
Canadian economy," added Mills.
The Aequitas Mandate
"We have been given a clear mandate by our founding investors: to serve the
collective interests of investors, issuers and intermediaries and, as a
result, the public at large," stated Jos Schmitt, President and Chief
Executive Officer of Aequitas. "We believe competition will enhance
confidence in Canada's capital markets, but more of the same won't address the
issues that exist. Instead, we will tap innovation and technology to promote
liquidity, fairness, cost savings and economic growth. This is the vision
upon which Aequitas has been founded."
Aequitas will deliver on its mandate by meeting four key objectives:
1. Always put the investor and issuer first, as directed by our
balanced, broad and open ownership structure;
2. Ensure quality markets and allow for sustainable market making;
3. Introduce innovative and affordable services that foster
meaningful competition, reduce costs and improve market
4. Provide all types of issuers with solutions to access the capital
they need to grow.
The Aequitas Value Propositions
Schmitt continued: "Our solutions will be a highly differentiated set of
services to meet the needs of the traditional investors and issuers. We seek
to build a strong partnership between the exchange, issuers and market makers
to promote true liquidity."
The Aequitas solutions will include:
-- New market structure solutions that seek to restrict predatory
and opportunistic trading strategies while challenging the
dominant make-take fee model;
-- Best-in-class smart order routing solutions available to all
investors and dealers;
-- Liquidity through sustainable market making;
-- Highly competitive fee models across innovative trading,
listings and market data offerings; and
-- A centralized platform for exempt market securities focused on
providing liquidity and strengthening the capital formation
To learn more about the Aequitas solutions, please visit
www.aequitasinnovations.com to read our Position Paper.
Aequitas' proposal to operate an exchange is subject to regulatory review with
a formal exchange recognition application to be filed. This filing is
currently planned towards the end of 2013. In the mean time, the immediate
next steps for Aequitas can be summarized in one word - dialogue:
-- Dialogue with investors and issuers to obtain further insights
and ensure that our solutions truly address their issues and
-- Dialogue with dealers, in particular the smaller and mid-size
firms, to ensure that our solutions will provide them with the
relief they need;
-- Dialogue with regulators to explain our solutions and the
benefit of enabling commercial solutions that will ensure more
balanced and efficient Canadian capital markets that ultimately
will lead to a stronger economy.
"Our ultimate objective is to improve market quality, promote fairness and
foster economic growth with all market stakeholders in mind," concluded
Schmitt. "To allow us to successfully execute upon this plan, market
stakeholders' input is critical. We are looking forward to obtaining the
industry's input and encourage all market participants to make their voices
About Aequitas Innovations Inc.
Aequitas Innovations Inc. is a company founded by a diverse group of Canadian
corporations, representing all market participants, working together to create
a new user-focused Canadian exchange. Founding shareholders of Aequitas
include: Barclays Corporation Limited; CI Investments Inc., IGM Financial;
ITG Canada Corp., PSP Public Markets Inc; and Royal Bank of Canada.
Joanne Kearney 416.804.5949 firstname.lastname@example.org
SOURCE: Aequitas Innovations Inc.
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