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 listing.
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 and liquidity.
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
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
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
"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:
Always put the investor and issuer first, as directed by our balanced,
broad and open ownership structure;
Ensure quality markets and allow for sustainable market making;
Introduce innovative and affordable services that foster meaningful
competition, reduce costs and improve market efficiency; and
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
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 process.
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 with investors and issuers to obtain further insights and
ensure that our solutions truly address their issues and challenges;
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
"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 heard."
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.
SOURCE: Aequitas Innovations Inc.
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