TMX Group, Canada’s biggest stock exchange operator, said on Wednesday it will introduce new technology in 2013 that will increase the speed of making trades “twentyfold” as it seeks to attract business around the world.
TMX, which operates the Toronto Stock Exchange and several other markets, calls the technology “TMX Quantum XA”, with XA standing for “express accelerated”. The company said it will cut trading time significantly by using specialized hardware to take a hefty portion of the workload off server central processing units, essentially the brains of computers.
TMX wants to attract dealers who trade for investors around the world looking for best prices and handling of stocks for their clients.
“There are investors all over the world that have capital that are looking to deploy that capital in various different regions and investment vehicles,” said Kevin Sampson, vice president of business development and strategy at TMX unit TSX Markets. “We need to ensure in Canada that we continue to attract that investment.
“Having higher performance, more efficient and faster trading technology improves our capability in attracting that investment and liquidity to our markets.“
TMX hopes the new technology will also boost its domestic market share, which is now sitting around 70% on a volume basis following rapid changes that whittled away the near-monopoly 98% share it held just three years ago.
There are 12 exchanges and alternate stock trading venues operating in Canada.
TMX Quantum will first be implemented on TMX Select, the exchange operator’s alternative trading system, in the first quarter of 2013.
It will then be integrated on the Toronto Stock Exchange and the small-capitalization TSX Venture Exchange around the end of 2013. The company said it “expects to incur incremental annual operating expenses of about $4 million to support the initiative“.
The move will reduce the average time it takes to make a trade to sub-100 microseconds from the “single-digit millisecond“ range, Sampson said. There are 1,000 microseconds in 1 millisecond, which is roughly the time it takes for a camera to flash.
The new trading system is designed to be capable of handling 200,000 orders per second. For the first time, TMX exchanges will be able to provide for 10 gigabit communication access, boosting capability from 1 gigabit.
(Reporting By Jennifer Kwan; Editing by Peter Galloway)