(January 21 – 09:30 ET) – The Toronto Stock Exchange says its cheaper to trade there than on the NYSE or Nasdaq A study by New-York based trading consultant Elkins/McSherry Company, has found that the market impact costs on cross-listed trades were 4¢ per share lower in Canada than in the U.S. – although the average trade sizes were much larger.
Market impact costs provide a measure of the change in the price of a stock from a point just prior to an order being placed to just after the trade. The TSE says Elkins/McSherry concluded that the better performance in Canadian markets is directly linked to superior liquidity and trading efficiency.
Another study, by Passport Financial Services, shows a clear advantage for the TSE over the NYSE and Nasdaq for block trading in large-cap stocks. It examined trade-to-trade data for all trades conducted on the TSE and the U.S. exchanges in 1997 and 1998.
This good news arrives in the face of continuing transformation at the TSE. Its members are expected to vote for demutualization this month. There’s some speculation that it will face splitting off its regulatory function as the alternative trading systems are integrated into the market. It faces intensified competition from ATS – the upstairs markets – as well as the U.S. exchanges.
“We are encouraged by these studies,” said Barbara Stymiest, TSE president and CEO. “But the TSE cannot be content. We must continue to push forward and do more to preserve and strengthen our position as a stock market leader in an increasingly competitive global environment.”
-IE Staff