For many in the securities industry, complexity is the new norm. Whether because of technology infrastructure, regulatory compliance or simply keeping pace with innovation, there’s simply just more to manage – everywhere. And, wherever complexity seems to appear, cost seems to show up like a faithful wing-man.

It seems reasonable, therefore, that one promising strategy to lower costs would be to decrease complexity – especially at the trade execution level. At the Canadian Securities Exchange, it is precisely the idea of making the current Canadian securities landscape more efficient that underpins their latest move to simplify access for a key stakeholder in the market ecosystem: the dealer community.

Lower Trade Execution Fees: A Bold Step Forward

As announced in an earlier news release, the CSE is taking a bold step to simplify pricing and access for the dealer community by eliminating the ‘maker/taker’ model and, in its place, implementing equal pricing for both active and passive sides of the trade.

The table below summarizes the new trade execution fee structure as it applies to three tiers of securities trading price. Under this fee structure, both active and passive fees are priced at the same rate on each tier.

This announcement is a win for the dealer community and for the trading public for two important reasons.

First, with better pricing comes improved participation and better functioning marketplaces. Second, by eliminating the maker/taker price distinction, the playing field has been leveled for liquidity provider and liquidity consumer.

Ultimately, however, the change in fee structure is a natural consequence of the need for innovation. According to CSE CEO Richard Carleton:

As the exchange for entrepreneurs, we are committed to bringing innovative solutions to market operations. We understand that by simplifying the moving parts of the market, we’ve not only lowered industry costs but we’ve enabled wider participation and access to trading of junior public companies.

Getting Noticed

The message of “simpler is better” is gaining traction with many junior public companies. The number of listed issuers on the CSE is up substantially through the first quarter of 2014 and trading volumes are also at historical highs.

While there are still many hurdles to clear, a streamlined and more cost effective framework for dealers is an important step towards making simple the new normal.

March was a great month for the CSE. From the record high trading volumes to the increased number of trades and the growing list of institutional partners, the CSE is continuing to fulfill its pledge to be “The Exchange for Entrepreneurs.”

The strength of the listed market was impressive. Two major components drove the growth – attractive listings that captured the imagination of retail investors as well as the attention of professional traders. This dynamic formula manifested itself in gains posted by the big banks of between 50 and 100 percent of their previous month’s trading figures. Additionally, when factoring in the performance gains from loyal, medium-tiered dealers, the numbers demonstrate that the Exchange is moving in the right direction and gaining traction.

March trading metrics speak volumes

Never in the past 11 years of CSE’s history has it seen a trading month that rivalled what was experienced in March 2014. Key trading metrics across the board attained all-time highs on CSE’s listed-market, including the following metrics for March:

Trades: 38,278
Total Volume: 310,645,194
Total Value: $105,276,255
Avg Price per Share: $0.34

When compared to the previous month it becomes apparent how significantly trading activity can move within a 30 day period:

February 2014
Trades: 8,690 (up 440% in March ’14)
Total Volume: 137,936,188 (up 225% in March ’14)
Total Value: $23,778,038 (up 443% in March ’14)
Avg Price per Share: $0.17 (up 200% in March ’14)

Even more dramatic is the comparison of trading activity from March of last year. Looking at the following numbers for March 2013 demonstrates how much CSE trading has gained traction over the past 12 months:

March 2013
Trades: 3,890 (up 984% in March ’14)
Total Volume: 82,839,702 (up 375% in March ’14)
Total Value: $7,810,053 (up 1348% in March ’14)
Avg Price per Share: $0.09 (up 377% in March ’14)

Of course, a chart of recent trading on CSE says it all (click to enlarge):

Continuing to Build

Although online access is an on-going concern, CSE sees continued reason for optimism. This past month it was positive to see bank-owned dealers contribute to the bump in trading, including Scotia iTrade, who joined the list of online brokerages that have enabled online trading for CSE stocks.

There is still a lot of work ahead for CSE but the performance numbers from March validate a sentiment that the Exchange has championed all along: “if they want to trade, they will find a way to access the market.”

CSE recently consolidated its trading venues (CNSX and Pure) for the CSE rebranding.  You can read about this “Project One” initiative here.

This initiative introduces efficiencies and cost savings for our clients and most importantly, for the dealers that connect to our marketplace.

To clarify – CSE now trades both CSE-listed securities (like Gener8, CSE:GNR) as well as other Canadian listed securities all on one platform. Please note that CSE-listed securities do have slightly different trading hours in comparison to other Canadian securities trading on CSE. Here is a breakdown:

CSE listed market (formerly CNSX):
Hours are from 9:30-4pm.  Pre-open is 7am.  No after-hours trading.

CSE other listed market (formerly PURE):
Hours are from 8-5pm.  Pre-open is at 7am.  No after-hours trading.

Consequently, the CSE is Canada’s busiest venue for trading after 8am and is the preferred destination for early morning trading activity.

Bird.  Meet worm.