New TMX chief focused on better data
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Dec 03, 2014  |  Vote 0    0

New TMX chief focused on better data

Lou Eccleston says the stock exchange operator can help clients make more informed trades

OurWindsor.Ca

On the controversial subject of high-frequency trading, the new leader of the country’s largest stock exchange company says he’s neither for it nor against it.

His job as chief executive officer of the TMX Group Ltd. is to ensure that clients have everything they need to make an informed decision, Lou Eccleston said Wednesday

“We’re not either an advocate of high frequency trading or a critic. We want to encourage all forms of trading,” Eccleston said in his first meeting with reporters since assuming the job Nov. 3. “You’ve got to have a marketplace where participants can come in and out. We’re not trying to favour or inhibit any type of trading.”

Eccleston, 57, joins the TMX at a time when it’s facing growing competition, not just from global rivals but also at home now that Aequitas Innovations Inc. has been given the go-ahead by regulators to set up a competing stock exchange.

Backed by the Royal Bank of Canada and a group of market investors, Aequitas has said it plans to curb high-frequency trading abuses, which can occur when one set of investors skims profits by quickly ducking in and out of the market at the expense of long-term investors, such as pension and mutual fund companies.

The practice was exposed in the bestselling book Flash Boys by Wall Street journalist Michael Lewis. A counterpoint to that view has been presented in a book called Flash Boys: Not so Fast, Eccleston noted.

With a strong background in data services, including stints at McGraw Hill Financial, Thomson Financial and Bloomberg LP, Eccleston said modern trading decisions require huge amounts of information about what’s happening in markets around the globe.

The TMX Group can help its clients by providing more and better data and allow the company to compete on value rather than price, he said.

Much like cable companies, different data packages could be offered at different price points, he said.

After five years of failed merger attempts by various stock exchange operators around the globe, including a bid by the London Stock Exchange to merge with Toronto, Eccleston said that the future lies in making “niche” acquisitions that accelerate the TMX’s capabilities.

He cited data compression and data visualization companies as examples.

Referring to the growing trend of some Canadian traders routing their orders through U.S. exchanges, Eccleston said he would like to see more consistent regulation among stock exchanges around the globe. Traders cite lower U.S. exchange costs as the reason for sending some trades south.

For now, the new CEO says he plans to spend the next six to nine months doing “a deep dive” into every aspect of the TMX’s business. By the middle of next year, he expects to be in a position to outline how he plans to execute on the company’s vision.

The company’s strengths include its technology, its Quantum trading platform, its Razor risk management platform, and its experience running a venture exchange and a derivatives exchange, he said.

He said his priority is profitable growth.

The current slump in the global price of oil, a key commodity on the Toronto Stock Exchange, is a challenge, he acknowledged. The company needs to diversify its lines of business to offset cyclical stocks, he said.

The TMX holds 74 per cent of the market share in Canada. The company is owned by a consortium of 13 of Canada’s largest financial institutions and pension funds.

An American, Eccleston says his previous jobs frequently brought him to Canada. He knew his predecessor, Tom Kloet, who announced in March he planned to retire this year. While at Thomson Reuters, he got to know David Thomson, chairman and third-generation heir to the family business.

After 30 years of commuting in the U.S., he said, he plans to live in downtown Toronto and walk to work.

Toronto Star

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