TMX’s rules could lure US dealers as trades go OTC

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By Daniel O'Leary
06 Aug 2014

The Montreal Exchange could see more liquidity from US-based equity dealers wanting the benefits of exchange trading, while retaining the ability to protect their positions from front running by other market participants. TMX’s exchange rules allow dealers to hedge their positions before executing their trade, helping reduce delta risk - or the option’s price compared to the underlying stock.

“[On TMX] you can do your hedge and then print it afterwards,” noted an equity trader at a Canadian dealer in New York. “They don’t have the same rules as [the Chicago Board Options Exchange] and [the CME Group]. If people wanted a listed vehicle or a listed market, ...

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