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Aequitas raises additional funds ahead of stock exchange launch: Reuters

(Reuters) – Aequitas Innovations Inc said on Thursday it has completed a new round of capital raising ahead of the launch of its new stock exchange, which is set to begin operations this month.

The Toronto-based firm said indications of interest from both founding shareholders and new shareholders represented close to 150 percent of the amount Aequitas originally planned to raise. It said the offering was distributed so as to ensure a fair representation of all market participants and stakeholders.

Details on the amount of capital raised were not disclosed.

Aequitas’ new shareholders that represent both investors and capital-raising companies include Canadian pension fund manager British Columbia Investment Management Corp (bcIMC), fund managers Davis Rea Ltd and Invesco Canada Ltd, and Chicago-based private equity firm Vernon & Park Capital LP.

It said new shareholders representing the dealer community include Jones Gable & Co Ltd, Maison Placements Canada Inc and BBS Securities Inc.

Other prominent investors include Don Ross, chair of Jones Gable & Co; Vincent Chahley, former managing director of Tristone Capital Ltd; and Perry Dellelce, founder and managing partner at Toronto-based law firm Wildeboer Dellelce LLP, among others.

“The over-subscription on our share offering gives us a clear vote of confidence,” Jos Schmitt, chief executive of Aequitas, said in a statement, noting the new shareholder group was “strong and diversified”.

Aequitas’ Neo platform will offer trading, listings and, through one of its affiliates, related technology services. It is looking to capture market share from and challenge TMX Group Ltd‘s dominant Toronto Stock Exchange and its TSX Venture and Alpha platforms, along with other rivals like Chi-X and CX2.

Aequitas – a Latin term denoting fairness and the origin of the English word equity – is backed by Royal Bank of Canada, Barclays PLC, pension funds OMERS and PSP Investments, mutual fund managers CI Financial Corp and IGM Financial Inc, and Investment Technology Group Inc, among others.

The Aequitas model, which also includes plans for a private marketplace to fund early-stage companies, will attempt to limit controversial high-frequency trading strategies by implementing extra costs and speed bumps for them.

High-frequency traders use sophisticated algorithms to trade shares in milliseconds. They make it easier for investors to trade by stepping in and taking the other sides of many orders and profiting off of trading spreads.

Scrutiny around high-frequency trading intensified following last year’s release of best-selling author Michael Lewis‘ book, “Flash Boys: A Wall Street Revolt.” In the book, Lewis contends that high-frequency traders have rigged the stock market, profiting from speeds unavailable to others.

(Reporting by Euan Rocha; Editing by Alan Crosby)

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