Which system allows dealers and their clients to trade TSX listed securities directly?

• A. Liquidnet Canada Inc.
• B. TMX Group
• C. Instinet Canada Cross Limited
• D. Montreal Exchange

Answer: (C)

The correct answer pertains to the system that enables dealers and their clients to facilitate direct trading of TSX-listed securities. Instinet Canada Cross Limited is designed as a crossing network, where institutional investors can trade directly with one another while ensuring minimized market impact. This system offers a platform for anonymous matching of trades, allowing participants to connect without revealing their identities or intent prior to execution.

This functionality is particularly beneficial in reducing transaction costs and improving trade execution for larger orders by circumventing the traditional market mechanisms that might expose the order to public view. Therefore, it plays a vital role in providing efficient access to liquidity in the execution of trades for securities on the TSX.

In contrast, other options like Liquidnet Canada Inc. and TMX Group serve different purposes within the trading landscape. While they may offer platforms for trading, they do not specifically focus on the direct transactions of TSX-listed securities in the same manner as the crossing service provided by Instinet Canada Cross Limited. The Montreal Exchange, on the other hand, primarily deals with derivatives rather than securities listed on the TSX. Understanding these distinctions is crucial for grasping the unique roles each system plays in the trading ecosystem.