Canada's latest crossing system was launched last month with some success. Markets Inc's Blockbook, a continuous crossing system began trading August 22.
Indeed, the Canadian market is essentially an upstairs dealer market. Jackie Chung, a principal at eClientscope Inc, said that investors in the Canadian marketplace have difficulty finding liquidity. That's why about 53 percent of all shares trade on the block desks of brokerage firms, she said.
In fact, one crossing network has already seen its demise. ITG had licensed its Posit product to the Toronto Stock Exchange in 2002. However, the system never caught on in Canada, and the TSX closed the system Dec. 31, 2004. Chung attributed the failure to the fact that Posit never gained traction into traders' workflow. She also said three crosses daily weren't enough.
Blockbook, Chung said, faces two key challenges: Getting enough liquidity into the system, and that, like most matching engines, interest in a stock is typically one-sided.
>>The complete article is available at Traders Magazine
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