Goldman to open Canadian dark pool

By Wire services | August 18, 2011 | Last updated on August 18, 2011
2 min read

Another new stock market is set to debut in Canada, this time in the hands of New York investment bank Goldman Sachs.

Following the trend set by alternative trading systems Alpha, Omega and Chi-X, the new market will be named after a letter of the Greek alphabet: SIGMA X. The launch date has yet to be announced.

SIGMA will be another dark pool, which allows investors to buy and sell securities anonymously. Dark pools tend to subvert the laws of supply and demand by allowing buyers to assemble large positions in a company without moving the market.

Goldman says the market will be financed by several investors including brokers, hedge funds and institutions.

“The growth potential of the Canadian equity market is significant,” said Todd Lopez, managing director and co-head of Americas sales, Goldman Sachs Electronic Trading. “We believe unique, alternative pools of liquidity will continue to play an important role in the Canadian market’s development.”

The move comes as competition in the stock market space intensifies.

TMX Group, operator of Canada’s major exchanges, including the TSX, is in the middle of a hostile takeover bid for the company.

The bidder, Maple Group Acquisition Corp., which groups a number of financial institutions and pension funds, is giving investors until the end of September to decide whether they want to tender their shares under the $3.8-billion offer.

The potential acquisition of TMX would merge it with Maple’s market operations, combing the country’s two biggest competitors and raising concerns among some about concentration.

Goldman said in a release that its trading system would “provide a broad source of Canadian equity liquidity.”

The SIGMA X system would be the 11th stock market to operate in Canada.

Wire services