Aequitas NEO, a Canada-based start-up stock exchange, has announced the first exchange-traded fund to list on its platform will be from the PowerShares division of Invesco Canada. The PowerShares Dorsey Wright Associates (PDWA) Global Momentum Index ETF is due to begin trading in early March subject to the approval of regulatory authorities.
In a bid to attract corporate clients Aequitas NEO offers competitive listing fees that currently undercut those offered by the Toronto Stock Exchange. The firm also touts a variety of benefits including a robust system ensuring reliable liquidity and free real-time market data to enhance visibility.
Peter Intraligi, President of Invesco Canada.
Jos Schmitt, President and Chief Executive Officer of NEO, commented: “With a shared vision of bringing competitive and innovative solutions to the Canadian capital markets, Invesco Canada is the perfect partner to kick off the listing business on NEO. We have designed our listings offering to ensure we optimise the investor experience. We look forward to meeting the needs of companies and investment products who choose to list on NEO.”
Peter Intraligi, President of Invesco Canada, added: “We have completed our due diligence on NEO’s operations, including its trading and market data business, and we are impressed with what we found. Through innovative and competitive investment products, we strive to give investors new opportunities to achieve their long-term financial goals. Invesco is a strong advocate of free market competition, as we believe it spurs innovation, which ultimately benefits investors.”
Invesco Canada is a major financial partner of Aequitas NEO, which makes the choice of a PowerShares ETF for the exchange’s initial listing unsurprising. But, it remains to be seen whether the firm can attract other big names and there may be challenges ahead for the new firm. Many larger institutions may be reluctant to migrate products from their current listings on the Toronto Stock Exchange for fear of losing official investment benchmark status from large institutional investors. That being said, the listing of a PowerShare’s ETF based on the well-known momentum strategy developed by Dorsey, Wright and Associates is indicative that the newcomer aspires to be a serious contender.
The premise of the PDWA ETF range is that well-performing equities will continue to perform and its strategy works by attempting to identify those firms with the strongest indications of relative strength. The methodology compares the price momentum of every firm, sector, or country against that of every other within the fund’s investable universe, assigning a buy signal to the stronger of each pair. All potential constituents are ranked in descending order according to their number of buy signals. The best ranked constituents are chosen for inclusion based on the fund’s minimum threshold for diversification.