November 25th, 2016
The Competition Bureau recently discontinued its investigation against TMX Group. The investigation was based on a complaint made by Aequitas Innovations Inc., alleging that TMX Group engaged in anti-competitive practices by impeding Aequitas’ ability to develop a new consolidated securities market data product. The Bureau concluded that there is no finding of abuse of dominance at this time.
Securities market data provides trading-related information for publicly listed securities and allows market participants to make informed investment decisions. In Canada, market data is derived from three main sources: individual market places such as the Toronto Stock Exchange and TSX Venture Exchange, data vendors such as Bloomberg and Thomson Reuters, and the Information Processor, a service provided by TMX Group. Aequitas was in the process of developing a new, less expensive market data product called “CMV Connect”, which consolidates private market data from investment dealers rather than from Canadian marketplaces. Aequitas needed to obtain a substantial amount of private market data from participating investment dealers in order to compete with existing market data products.
The Bureau found that TMX Group imposed contractual clauses which prohibit investment dealers from sharing private market data information with third parties without TMX Group’s written consent, and that TMX Group has indeed refused requests from investment dealers to share their data with Aequitas. Nevertheless, the Bureau concluded that Aequitas is unlikely to be able to obtain enough market data to develop a sufficiently competitive product, even in the absence of TMX Group’s contractual restrictions, due to the lack of interests and credible commitments from investment dealers to release confidential trading information. As a result of these findings, the Bureau discontinued its investigation on the basis that TMX Group’s contractual clauses were unlikely to substantially lessen or prevent competition in a market.