The Canadian Securities Administrators (CSA) is reducing the cap on active trading fees for securities that are only traded in Canada to 0.017¢ a share from 0.3¢ a share. Meanwhile, the cap on interlisted stocks will remain at 0.3¢ a share and the cap for securities trading at below $1 a share will remain at 0.04¢ a share.

When regulators adopted the cap in July 2016, they were concerned about keeping the Canadian approach in line with the one taken by the U.S. Securities and Exchange Commission (SEC), given the high level of integration between the U.S. and Canadian markets, according to a CSA notice published on Thursday.

“As liquidity providers are sensitive to rebates they receive for posting orders on certain marketplaces, a decrease in fees charged by Canadian marketplaces would also result in a decrease in rebates available to liquidity providers,” the CSA’s notice says. “If the difference in rebates between Canada and the U.S. for interlisted securities was too large, a shift of liquidity to U.S. marketplaces and widening spreads on Canadian marketplaces could result.”

However, the CSA also acknowledges that some in Canada’s securities industry believe that the fee cap is too high. And, as concerns about driving liquidity south of the border are not valid for stocks that trade in Canada only, regulators have determined that a reduction in the cap is warranted for purely domestic stocks.

The decision to cut the cap on domestic stocks to 0.017¢ reflects the value of the stocks traded, the CSA’s notice says.

“We calculated the volume-weighted average price for interlisted securities and found that the 0.3¢ cap for interlisted securities represents 1.2 basis points. We then calculated the volume-weighted average price for non-inter-listed securities and applied the same basis point equivalent,” the CSA’s notice explains.

“These amendments are intended to address concerns raised regarding trading fee costs, specifically that the trading fee should reflect the value of the stocks traded, while also addressing liquidity needs in the Canadian marketplace,” says Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers.

Assuming that the required ministerial approvals are obtained, the amendments will come into effect on April 10 and markets would have until May 15 to make the required fee changes.

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