TMX Group has launched a Canadian trading platform comprising two order books, Alpha-X and Alpha DRK. Rizwan Awan, president of equity trading and head of TMX markets, products and services, spoke to BEST EXECUTION exclusively on how the new platform is designed to optimise trading strategies and improve their execution quality.
The two new equities order books are designed to provide high quality execution for natural order flow, limit adverse selection resulting from natural speed advantages in the trading ecosystem, and improve the overall trading experience for all participants amid fast-moving, modern markets.
“The order books leverage a ‘speedbump’ to democratise speed and provide smart order types that dynamically reprice to get out of the way of fast moving markets,” Awan explained.
“As trading goes more electronic, navigating a multi-market environment gets more complex. Fast moving markets require specialised order handling to avoid adverse selection. This can be a costly and time consuming endeavour to keep pace with the technology arms race.”
Alpha-X is a visible order book that has all of the same order types and trading functionalities currently available on TSX Alpha Exchange, and features the new smart limit order type.
Alpha DRK is a fully dark order book with a comprehensive suite of pegged (primary, market, minimum price improvement, midpoint) market and limit order types, and has the new smart peg order type.
Smart limit and smart peg are new order types designed to help clients navigate fast moving markets and optimise their trade execution by adjusting their orders based on real time market conditions.
“Alpha-X aims to limit adverse selection by only allowing orders to execute when the broader national best bid and offer (NBBO) is deemed to be stable. It does this by leveraging our proprietary AI signal Quote Decay Signal (QDS) coupled with our smart order types,” Awan told BEST EXECUTION.
“Smart limit orders automatically back away from the NBBO when a quote decay is imminent. Participants can leverage the smart order types using their existing technology stacks, mitigating the need for complex and costly technology buildouts.”
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