The upstart Aequitas NEO Exchange Inc. is seeking regulatory approval to enable investors to trade foreign-listed structured products on its exchange, according to a notice the Ontario Securities Commission (OSC) published on Thursday.
Specifically, the Toronto-based firm is planning to allow trading in structured product notes that are listed on regulated foreign exchanges and not on exchanges in Canada, the OSC notice states.
Currently, Aequitas says that Canadian investors don’t have easy access to these products, nor do they have much price transparency either, which makes it “difficult to deploy dynamic investment strategies, comparing similar products by different issuers and tracking performance. It is also difficult to exit positions optimally, as redemptions are generally offered at most once a day.”
Aequitas, which is planning to introduce the new feature in the fourth quarter, says that “providing less expensive access and transparent pricing for products that are widely available in Europe” would be a positive for Canadian investors and Canadian capital markets generally; and that it will likely lead to “the issuance of similar listed products in Canada, generating further competition in the offerings of these products.”
Comments on the proposal are due by Sept. 10.