Alpha Aims to Take 40% of Canadian Stock Trading, Schmitt Says

July 7 (Bloomberg) -- Alpha Trading Systems, an equity platform owned by Canada’s biggest banks, aims to have as much as 40 percent of the Canadian market for stock trading “in a couple of years,” Chief Executive Officer Jos Schmitt said.

Alpha has gained market share from TMX Group Inc.’s Toronto Stock Exchange and TSX Venture Exchange since it started eight months ago. The firm captured 2.9 percent of equities trading in the first quarter, according to the Investment Industry Regulatory Organization of Canada. Schmitt has forecast that his Toronto-based company would have a 20 percent share within the first year.

“We are developing a clear roadmap to further growing that towards what I think should be 30 to 40 percent,” Schmitt said in an interview today.

TMX Group’s share of Canadian stock trading slipped below 90 percent in May after Alpha and rivals including Pure Trading, Chi-X Canada and Omega ATS gained, according to Kevan Cowan, head of equities at Toronto-based TMX Group.

“The market is going to be spread between a number of venues and I don’t think anyone will be above 50 percent, and the largest ones will be probably be around 40 percent,” Schmitt said. “That is where we’d love to be in a couple of years.”

Alpha said yesterday it will offer free trades at the market open and will also remove a premium for odd-lot trades on TSX Venture Exchange, starting Aug. 1. The company will also cut fees by 29 percent for stocks trading under C$1 ($0.86) and boost rebates by 7 percent for putting shares worth at least C$1 onto Alpha.

“This was very focused on trading fees, where I think the costs are indeed getting out of control,” Schmitt, 46, said.

Alpha may drop fees further in the future, Schmitt said.

“When we clearly see that activity continues to grow and rise at Alpha, we will continue to look at ways to make the market more attractive,” he said.