Canadian Exchange operators clash over market data fees

TORONTO, Dec 8 (Reuters) - Canadian exchange operator
Aequitas Innovations alleged on Tuesday that rival TMX Group
X.TO was abusing its market dominance to overcharge for data,
and said it has filed a complaint with the Canadian competition
watchdog seeking an investigation.
Toronto-based Aequitas, which operates the newly minted Neo
Exchange, said it believes TMX is using its dominant position to
maintain control over pricing of data in Canadian capital
markets.
"In the area of market data, we believe the TMX has remained,
in effect, an unfettered monopoly, leveraging its market power
to charge prohibitive and monopolistic prices," Aequitas CEO Jos
Schmitt said in a statement.
Aequitas contends that the prohibitive cost of data has hurt
Canadian investors and publicly listed companies.
In response, the TMX in an email said it operates within all
applicable laws and is confident it can fulfill its role within
Canada's regulatory framework.
"We charge competitively for market data, commensurate with
the value of the products and services TMX provides to clients,"
said TMX, which operates the dominant Toronto Stock Exchange and
the TSX Venture Exchange.
In Canada, each trading platform can set its own fees for
trading data, unlike the United States, where markets pool such
data and brokers and other market players pay a fee for the
consolidated pool. The different U.S. venues then split the fees
based on their market share of trading volumes.
Aequitas wants to shake up the market data space by pooling
such data directly from dealers rather than relying on trading
venues. It contends this would give market participants a more
holistic picture of trading activity in Canada for a much lower
cost.
The company however claims TMX is stymieing its plans by
refusing to allow investment dealers to contribute their own
private market data. It says TMX's data service agreements with
the dealers in Canada prevent these dealers from sharing even
their own internal data on their own trades with Aequitas.
The complaint was filed with the Competition Bureau, an
independent law enforcement agency that ensures businesses
operate competitively.