More investors using dark pools

April 25, 2014 | Last updated on April 25, 2014
2 min read

Canadian stock markets were more efficient in Q1 2014 than in the previous quarter, finds a new report by research firm ITG.

It says, “Overall market quality continued to improve [due] to higher volumes [and] lower spread[s] and volatility.” That led “to reduced realized trading costs” for Canadians.

Specifically, spreads have tightened by 0.93%, and volatility has fallen by 0.57%.

Read: TSX to outperform this year

However, TSX also lost market share over the same period: the report suggests this is the result of increased activity on alternative trading systems such as dark pools.

Altogether, market share dipped to 58.76% in Q1 2014, compared 58.94% at the end of last year. “The decline was primarily [due to] a 55-basis-point increase in dark marketplace share, as trading activity on MATCH Now jumped to 3.53% of overall [trading] volume,” says the report.

Read: Do dark pools distort stock prices?

The report also notes there was a “number of high-level retirements and resignations among senior financial and government officials” in March.

First, the late Jim Flaherty stepped down from his post as federal finance minister. He was replaced by Joe Oliver, who was previously the minister of natural resources. So far, Oliver’s toeing the line and has received mixed reviews from experts.

For more on Oliver, read:

At the same time, Tom Kloet, former CEO of TMX/Maple Group, and Susan Wolburgh Jenah, former CEO of IIROC, announced their upcoming retirements. Whoever’s chosen to replace them will help decide how markets are run and regulated over the next few years, says the report.

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