Thomson Reuters, Alpha team up on Canada stock data

By Jennifer Kwan

TORONTO (Reuters) - Thomson Reuters and Alpha Group said on Wednesday they will offer a consolidated tape that will allow traders to see share prices offered across Canada's exchanges and alternative stock trading venues.

The deal should help Alpha's trading platform compete better with the TMX Group's Toronto Stock Exchange, Alpha said.

The companies said the price data would be derived from order and trade information from a range of Canadian equity markets, including Alpha ATS, Pure, Chi-X and the TMX Group. It will include time and sales data from the different sources.

Alpha Group, owned in part by the investment dealer arms of Canada's largest banks, is the biggest challenger to TMX, which operates Canada's dominant stock exchanges.

The companies said the new services, expected to be rolled out in the first quarter of 2010, represent an attempt to address the fragmentation of market data in Canada.

"This is a significant breakthrough for the Canadian marketplace, delivering a consolidated view of all liquidity across multiple venues, enabling each individual trader to operate with absolute confidence that they are trading at optimum levels for their clients," Jon Robson, president of enterprise at Thomson Reuters, said in a statement.

Alpha Group launched its alternative trading venue last November and has made inroads against TMX, which owns the small-cap TSX Venture Exchange and the Montreal Exchange derivatives market as well as the Toronto exchange.

Alpha Chief Executive Jos Schmitt said in an interview that the deal chips away at TMX's grip on Canadian stock trading and market data, offering people a choice on where they get their consolidated data.

"We've always been of the opinion that we don't want to see any service in the industry to be provided in a monopolistic fashion by a for-profit organization," he said.

"You need to come with adequate competition. This is the competition to it."

This summer the Canadian Securities Administrators, the umbrella group for the country's 13 provincial and territorial securities watchdogs, appointed TMX as information processor for five years to provide consolidated prices for Canadian-listed stocks from all marketplaces.

The companies gave no details on pricing for the consolidated tape, but Schmitt said he favors a U.S.-style model where exchanges or trading venues get paid for data based on their contribution to liquidity within a marketplace, rather than individual venues charging their own fees.

Proponents of that model believe Canadian regulators should cap market data fees, arguing costs to operate in the fragmented market have driven up the costs of trading.

Andre Craig, vice president at TMX Datalinx, said TMX welcomes the competition.

"We're happy to have other vendors and solutions out there that provide different solutions and choices," he said in an interview. "We believe that will create competitive and efficient markets in the long run."

TMX executives said TMX does not charge extra fees for providing consolidated data.

Shares of TMX Group were down 28 Canadian cents, or 0.82 percent, at C$33.88 on the Toronto Stock Exchange on Wednesday afternoon.

($1=$1.04 Canadian)

(Additional reporting by Andrea Hopkins; editing by Janet Guttsman)