A Regulatory Solution to Canada’s Market Data Problem

NEO Exchange calls on the Canadian Securities Administrators to
mandate consolidated market data for retail investors and investment
advisors

TORONTO–(BUSINESS WIRE)–Aequitas Innovations Inc. and its subsidiary Aequitas NEO Exchange Inc.
(“NEO” or “NEO Exchange”) are disappointed that the Competition Bureau
of Canada has decided not to continue its investigation into the TMX
Group at this stage. The Competition Bureau opened up an investigation
after NEO filed a formal complaint requesting a federal investigation
into certain anti-competitive practices of the TMX Group in December
2015. NEO believed, and continues to believe, that the TMX Group is
using its dominant market position to maintain control over the pricing
of market data in the Canadian capital markets. The main victims of the
lack of consolidated market data outside of trading desks and
proprietary trading firms in Canada are the retail investors, their
investment advisors and public listed companies.

“We have no doubt the Bureau did a thorough assessment of the issue and
we thank them for their effort,” stated Jos Schmitt, President & CEO,
NEO Exchange. “This decision was reached because not enough investment
dealers demonstrated support for a competitive solution that would give
retail investors and investment advisors access to consolidated market
data at a reasonable price. We will not speculate why dealers would not
seek a lower cost solution, as we understand they face numerous other
priorities. It is, however a sad day for Canadian capital markets – and
the country as a whole – when no one is ready to put the best interests
of the little guy first.”

With a competitive commercial solution no longer a current option, NEO
must call on the Canadian Securities Administrators (CSA), the
provincial securities regulators, to mandate access to consolidated
market data for all investors, including retail investors and their
investment advisors.

Over the course of the past 12 months, market fragmentation in Canada
has increased and the market share of the Toronto Stock Exchange (TSX)
has further declined due to increased competition in trading. Yet today,
retail investors and investment advisors only have access to TSX and TSX
Venture Exchange (TSXV) data, which is simply not enough. On any given
day this market data represents less than 35% of ETF trading and less
than 60% of trading activity in TSX and TSXV-listed securities.

This lack of access to information is a detriment to investors and to
our markets overall:

  • With only a partial view of trading activity in TSX and TSXV-listed
    securities, retail investors and the majority of investment advisors
    are missing valuable data to help make more informed investment
    decisions.
  • Unaware that they only have a partial view, retail investors and
    investment advisors may be led to have negative perceptions about the
    liquidity and transparency of Canadian-listed securities – a
    potentially negative impact on overall investor confidence and
    willingness to invest.
  • Investment opportunities in Canada’s publicly listed securities are
    often rejected due to the perceived lack of trading activity – a
    potentially negative impact on Canada’s economy and the ability of
    Canadian companies to raise capital.

“I have said it before and I will say it again: it’s time to put the
best interests of our investors and our public companies, first,”
continued Schmitt. “Mandating consolidated market data gives retail
investors and investment advisors the tools they need to fairly
participate. I will keep saying this until I see the necessary and
required movements to protect investors.”

NEO recognizes that the CSA and the Investment Industry Regulatory
Organization of Canada (IIROC) have taken positive steps recently to
begin to address the issue of access to market data. NEO is encouraged
by these signals and encourages them to continue their efforts. The US
securities regulator took a clear and strong stance on the issue by
mandating access to consolidated market data for everyone many years
ago. They re-affirmed this commitment again last December 2015. It’s
time for Canada to follow their lead.

About Aequitas Innovations Inc.

Aequitas Innovations, founded by a diverse group of prominent investors
representative of all Canadian capital market stakeholders, is the
parent company of the NEO Exchange and NEO Connect. The NEO Exchange is
a new Canadian stock exchange using a bold new blueprint that puts
investors, businesses looking to raise capital and dealers first.
Launched in March 2015, it offers an innovative trading venue and a
value added listing venue for capital raising companies and investment
products. NEO Connect is Canada’s new fund distribution platform.

For more information, please visit: www.aequitasNEOexchange.com

Contacts

NEO Exchange
Media Contact
Joanne Kearney, 416-804-5949
joanne.kearney@aequin.com