Tradelogiq Markets Inc. (Tradelogiq) is planning to implement the changes described below, subject to regulatory approval. Tradelogiq is publishing this Notice of Proposed Fee Changes in accordance with the “Process for the Review and Approval of Rules and the Information Contained in Form 21-101F2 and the Exhibits Thereto” (Protocol).
Pursuant to the Protocol, market participants are invited to provide feedback on the proposed fee changes. Feedback should be in writing and submitted by October 10, 2024 to:
Trading & Markets Division
Ontario Securities Commission
22nd Floor
20 Queen Street West
Toronto, Ontario M5H 3S8
e-mail: [email protected]
And to:
Jonathan Sylvestre
Chief Compliance Officer & Head of Market Structure
Tradelogiq Markets Inc.
25 York Street, Suite 612
Toronto, ON M5J 2V5
e-mail: [email protected]
Upon completion of the review by staff of the Ontario Securities Commission (OSC), and in the absence of any regulatory concerns, notice will be published to confirm the completion of OSC staff’s review and to confirm the intended implementation date of the changes
A. Proposed Fee Change
Tradelogiq is proposing to increase the monthly display fees applicable to each of Omega ATS Level 1 and Level 2 real-time market data (“fee changes” or “proposed fees”). No changes are being proposed at this time to Lynx ATS display fees.
The fee changes being proposed are outlined in the table below.
Omega ATS Display Fees – Monthly Subscription
| MARKET DEPTH | CURRENT | PROPOSED |
|---|---|---|
| Level 1 | $9.00 CAD / $9.00 USD | $9.50 CAD / $9.50 USD |
| Level 2 | $19.50 CAD / $19.50 USD | $21.00 CAD / $21.00 USD |
B. Expected Implementation Date
Tradelogiq intends to implement the fee changes on January 1, 2025.
C. The Rationale for the Fee Changes and Any Relevant Supporting Analysis
The proposed increase in Omega ATS display fees is a function of the increase in the value of Omega ATS data resulting from the growth in trading activity and market share over the past few years. The upper and lower bounds, and therefore the midpoint, of the fee ranges for Omega ATS as calculated under the CSA’s “data fee methodology” (DFM)[1], and presented in the following table, have increased as a result of this growth.
| Level 1 Range | Level 2 Range | |||
|---|---|---|---|---|
| Range applicable as of | Lower - Upper | Midpoint | Lower - Upper | Midpoint |
| Jan-22 | $6.17 - $8.90 | $7.54 | $14.45 - $20.65 | $17.55 |
| Jan-23 | $7.83 - $10.00 | $8.92 | $17.84 - $22.87 | $20.35 |
| Jan-24 | $8.37 - $10.60 | $9.49 | $18.58 - $23.72 | $21.15 |
Note: Ranges calculated under the DFM are applicable as at the beginning of a year and are based on the prior calendar year’s trading activity. E.g., The ranges applicable as of January 2024 are based on calculations applied to calendar 2023 trading activity.
We are providing transparency regarding these ranges so that we can highlight our approach to display fee increases. It is and historically has been our intention, when increasing our display fees, that they be positioned at the midpoint of the DFM range. As can be seen from the above table and below diagrams, our proposal for Level 1 and Level 2 display fees to be set at $9.50 and $21.00, respectively, was based on the midpoint of the most recently applicable DFM range.
We believe that the midpoint of the DFM range is an indicator of reasonableness. At the same time, setting our fees at the midpoint should allow the fees to remain within the range of reasonability in the event of a downturn in trading activity on Omega ATS (and buffer against the possibility of being made to reduce fees if they were to then exceed the DFM range’s upper boundaries).
A comparison of the proposed fees and those fees charged by our closest competitors also supports the reasonableness of the proposed fees. The below analysis indicates that the proposed fees, if approved, would be in line with or cheaper than those charged by our closest competitors, both on an absolute and relative basis.
| Level 1 | Level 2 | Per % of Average Share of Volume, Value and # of Trades | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Price | Per % Share of Volume | Per % Share of Value | Per % Share of # of Trades | Price | Per % Share of Volume | Per % Share of Value | Per % Share of # of Trades | Level 1 | Level 2 | ||
| Omega ATS (proposed) | $9.50 | $1.523 | $3.284 | $1.950 | $21.00 | $3.367 | $7.258 | $4.311 | $2.036 | $4.500 | |
| Nasdaq CX2 | $8.20 | $1.365 | $2.867 | $1.859 | $21.95 | $3.654 | $7.674 | $4.976 | $1.852 | $4.959 | |
| TSX Alpha | $10.05 | $2.062 | $2.560 | $2.566 | $23.40 | $4.800 | $5.961 | $5.520 | $5.961 | $5.961 | |
| CSE | $10.90 | $1.872 | $10.703 | $3.719 | $25.50 | $4.379 | $25.039 | $8.701 | $3.346 | $7.829 | |
| NEO-N | $11.25 | $4.500 | $5.298 | $3.771 | $26.20 | $10.481 | $12.339 | $8.782 | $4.437 | $10.333 | |
Notes:
1) Based on last three months of trading, June 2024 to August 2024.
2) Market share of volume, value and number of trades used to derive the above “Per % Share of” figures was calculated on an ex-intentional cross basis.
3) Comparable display fees of competing marketplaces based on published monthly fees for “professional subscribers” receiving a display of data for all listed securities traded on the marketplace. Tradelogiq’s fees apply to any display user type.
4) Per % of Average Share of Volume, Value and # of trades calculated as follows:
Price / [(% share of volume + % share of value + % share of # of trades) / 3]
5) Underlying data sourced from CIRO published monthly trading statistics available at: https://www.iiroc.ca/markets/reports-statistics-and-other-information/reports-market-share-marketplace
Considering the above analysis of the reasonableness of the proposed fees, it is our view that it would be unfair, and would place an unreasonable competitive burden on Omega ATS, to deny it the ability to charge fees at levels that, in our view, are reasonable both based on the DFM calculations and when compared to the fees currently being charged by our competitors.
D. The Expected Impact of the Proposed Fee Change on the Market Structure, Subscribers, and, if applicable, on Investors and the Capital Markets
The fee changes are changes to existing fees and do not introduce anything new or novel. Rather, they represent an increase in Omega ATS’s existing display fees.
In terms of impact, a number of Tradelogiq market data customers are being charged the Omega ATS Level 1 and Level 2 monthly display fees, although not all these customers incur display charges for both Level 1 and Level 2 market data.These customers are primarily access and data vendors, dealers, institutional investment firms, and trading firms.
Each customer can expect to incur an increase in costs for display use of Omega ATS data of 5.6% for Level 1 display fees and 7.7% for Level 2 fees. Taking into account the ratio of current Level 1 display users to Level 2 display users for Omega ATS data, the increase calculated on a weighted-average basis is 6.3%.
The dollar impact of this increase to any one customer will vary based on each customer’s number of display users, the mix of Level 1 and Level 2 users reported by each customer, and will also depend on the extent to which the charges are passed down – e.g., we understand that some vendors pass marketplace display use charges down to customers.
The net cost impact to any customer (or end customer in the case of display usage through a data vendor) will also be dependent on any increases or decreases to the display fees charged by other marketplaces, based on whether those display fees are above or below the CSA DFM calculated fee ranges for these fees between January 1, 2024 and December 31, 2024. In the case of any further increases, customers will incur higher market data costs, whereas in the case of fee reductions, these will help offset the impact of our proposed increases, as we expect that virtually all display usage of Omega ATS data is by customers relying on a consolidated display mechanism.
E. Expected Impact of the Fee Change on Tradelogiq’s Compliance with Ontario Securities Law and the Requirements for Fair Access and the Maintenance of Fair and Orderly Markets
We do not expect any impact on Tradelogiq’s compliance with Ontario securities law, or in relation to fair access, and fair and orderly markets on Omega ATS.The fee changes will be applied consistently across all real-time market data display customers.In addition, the maintenance of our fees within the calculated DFM ranges, as well as the relative positioning of our fees versus our nearest competitors, serve as evidence that the associated increase in fees does not present fair access concerns and does not represent any unreasonable barrier to access.
F. Summary of any Consultations, and the Internal Governance Process Followed to Approve the Change
Notice of the fee increase is being provided in accordance with standard industry practices, and in accordance with the terms of our market data agreements.
The standard internal governance process of executive management review and approval for the fee changes was followed.
G. If Applicable, whether the Proposed Fee Change would Introduce a Fee Model or Feature that Currently Exists in Other Markets and Other Jurisdictions
The fee changes involve existing fees that are commonly charged by Canadian marketplaces for the display of market data.
[1] For information about the DFM see CSA Staff Notice 21-319 – Data Fees Methodology.
