Alpha ATS takes credit for TMX's lower fees

Jos Schmidt, chief executive officer of Alpha, in his February newsletter, has taken credit for the TMX Group's decision to reduce its trading fees for securities under $1. He points out that when his Alpha reduced trading fees for stocks under $1 to 0.04 of a cent per share to the active side (the buyer) while rebating the passive side (the seller) 0.02 of a cent per share, soon after the TMX Group followed suit. On March 1, 2010, for stocks under $1 the TMX will charge the active side 0.03 of a cent per share and rebate the passive side 0.01 of a cent per share. The TMX said its decision to lower trading fees for securities under $1 would save the industry participants between $15-million and $18-million. This is bad news for TMX Group shareholders, because it is another way of saying revenues will drop between $15-million and $18-million. (Revenues have already been lost in other areas as a result of a price-cutting war initiated by Alpha, such as securities over $1.)

Mr. Schmidt says he applauds the TMX's decision to reduce prices, but wants to remind his customers that the TMX's price reduction only applies to trades taking place during continuous trading and to standard order types. He explains, "What this means is that trades at the opening ... will continue to be treated as before." He then notes that opening trades are free on Alpha. The TMX charges 0.12 of a cent per share per side (active and passive) for opening trades on the TSX-V, up to a maximum of $60 per side.

Meanwhile, one of the smaller ATSs, Omega ATS, has found a new investor. Tactico Inc., an international adviser that specializes in tactical solutions for financial services companies, acquired a 24-per-cent interest in Omega. Neither Omega nor Tactico has disclosed the financial terms of the deal. In an interview with trade publication Advanced Trading, Tactico's co-founder and managing director, Eric Stoop, says he prefers Omega because it is one of the independents. "It's not bank owned like Alpha Trading Systems and it's not like Chi-X that started in a different region. It's really a home grown, trader oriented ATS," he says. Tactico plans to increase its ownership in Omega over time to 33 per cent.

Omega has moved away from the per-share price war between Alpha and the TMX, and instead charges seven cents a trade, regardless of how many shares are traded. Omega's market share is currently much lower than the three bigger ATSs, but Mr. Stoop expects Omega's market share will grow to an average daily volume of 20 million to 25 million shares by the end of 2010.

by Stockwatch Business Reporter