What's next for Canadian internalization? Does the current model strike an appropriate balance for market participants to both optimize execution efficiencies and provide a fair and equitable market?
Internalization has been one of the more interesting topics of debate in the Canadian market. The Consultation Paper by CSA/IIROC, on Internalization Within the Canadian Equity Market, is a comprehensive summary that details different kinds of internalization, their reasons and benefits as well as possible concerns. The conclusions and concerns bear resemblance with those arrived at in other parts of the world, most notably the internalization rules in Europe through the MiFID II regulations, but there are also distinct differences. In this article we will explore the relevant topics associated with internalization in the Canadian marketplace.