The Montreal Exchange (MX) is looking to shift the start of its trading day to 2 a.m. to align with the start of trading in London.
The derivatives exchange is proposing a set of rule changes designed to facilitate a move to an earlier market open from its current 6 a.m. open. The shift will allow traders to “manage their exposure to Canadian markets during non-regular Canadian business hours,” the MX says in its proposal to extend trading hours.
“The extended hours initiative will help the [exchange] achieve its strategic goals: global expansion, participant diversification, development of new liquidity centres and brand development,” it says.
The demand for Canadian listed derivatives is growing globally, the MS says, and market participants’ needs are changing. The exchange believes that the time is right to consider extending its trading hours, “in order to remain relevant, continue to grow the derivatives trading market and address the needs of existing market participants as well as end-users.”
Along with planned changes to the rules governing the operation of the exchange, the MX also proposes to expand the definition of an approved person in order to enhance market access for its global participants. It says that the current definition, “is restrictive and could limit the trading activities during the early trading hours, especially for block trades and special terms transactions.”
As a result, the exchange is looking to expand market access to enable employees of approved participants, and their affiliates and subsidiaries, to execute trades on behalf of their firms. “This initiative will help the [exchange] achieve its strategic goals of global expansion and development of new liquidity centres. In doing so, the [exchange] will better align itself with the standard practice of international derivatives exchanges,” it says.
As with the proposal to move to an earlier open, the MX says that the change to its approach to market access will help it remain competitive and relevant “in an environment where markets are becoming increasingly interconnected.”
In particular, it says that many of its participants employ a “follow-the-sun workflow”, which means that its operations transfer between offices in different time zones, allowing for, “uninterrupted customer service and order flow.”
By broadening access to the market, the MX says that it will support the growth of the Canadian derivatives market, encourage market participation, and better align its market access model with international standards.
Comments on the proposed amendments are due by Jan. 31, 2018.