Omega ATS Enters Fixed-Income Trading

The Canadian fixed-income market is about to become more fragmented as Omega ATS has launched trading in 10-year Canadian government bonds.

"We're sticking our toe in the water with those through a controlled release and then will build upon them," says Mike Bignell, president of Omega. "They are very liquid and tradable against futures, so there are arbitrage possibilities."

The alternative trading system (ATS) is trading the new instrument class on its ThymeX matching engine, which it deployed earlier this year.

"There wasn't much we needed to do to ThymeX," says Bignell, as the fields were already within the platform. “It took to trading fixed income like a duck to water."

To trade and receive market data, bond traders can connect to Omega as equities clients do.

"Even though these are separate instruments, it's still trade execution, which is what we are trying to foster," say Bignell. "Our feed goes out through Fidessa and you can see our quotes on Bloomberg."

The ATS plans a trading fee of CAD$7 per CAD$100,000 notional. However, Bignell says the ATS may lower the fee to CAD$5 per CAD$100,000, but Omega must file the proper paperwork with the Ontario Securities Commission.

To bring liquidity to the new market, Omega is in the midst of a fee “holiday” that will last until Jan. 1, 2011. "We may look to expand it through February as well," says Bignell.

In the meantime, Omega plans to introduce trading in US-listed instruments, such as stocks and exchange-traded funds (ETFs), in the latter part of January.

"There are still some regulatory issues to deal with since these securities do not have a prospectus in Canada," says Bignell.