Billing modernization and simplification in 2023

Montreal Exchange (the "Bourse") wishes to inform market participants that, in 2023, it will modernize its billing system to bring it in line with best practices. The current billing system is nearing end-of-life and is creating remediation work both for the Bourse and for its clients. Modernized billing will smooth the transition to Gross Client Margin at CDCC by enabling clearing members to modify CDCC margin accounts without simultaneously affecting MX billing.

The modernization has implications for the structure and application of fees. To ease the transition, these will be applied in three phases.

• In the first phase, the Bourse will streamline the rebating system in the equity and ETF options product line as well as in the Volume Rebate Program (VRP). Phase one will occur 1 January 2023. This is a prerequisite for further simplification and will coincide with the service-fees simplification occurring on the same date (click here for the notice).
• In the second phase, the Bourse's operations team will work with clients to reduce the number of CDCC subaccounts per client to a smaller number that better represents the margin-account exposures at clients. Phase two will be ongoing throughout Q1 2023.
• In the third phase, the Bourse will attribute its trading fees to the MX account code that trades, removing the dependency on CDCC subaccounts. Phase three will occur in Q2 2023.

Phase one (1 January 2023)

Currently, MX pays rebates to options participants for equity and ETF options trades and pays rebates to VRP participants in five tiers (depending on a participant's current monthly volume by product). In both cases, the Bourse will substitute the payment of rebates for the simpler practice of charging the net fee directly. Charging a net fee has no economic effect but simplifies processes. These changes are specified in Circular 149-22.

The VRP will be further simplified by removing the dependency on current monthly volume as well as reducing the tiering to a maximum of two tiers (and in many cases one). VRP clients who demonstrate three months of volume above a specific threshold for a product with a second tier will benefit from the second tier's lower flat fee. These changes are specified in Circular 150-22.

Since the word "rebate" is contained in the name VRP, the program's name will change to reflect the removal of rebates. Click here for the modified Terms and Conditions, which will become effective 1 January 2023.

Phase two (Q1 2023)

Currently, clients of MX have opened more CDCC subaccounts than are necessary for margining purposes, as this was the means to take advantage of fee programs that have existed historically. This results in a large network of subaccounts that have to be maintained by both the Bourse and by its clients, which complicates reconciliation during the billing process.

Following phase one, opening multiple subaccounts is no longer necessary to optimize MX fees. Therefore, the Bourse's operations team will work with clients who have large numbers of subaccounts to help them reduce, which will ease the burden on both sides. The operations team will reach out to begin this process.

Phase three (Q2 2023)

Having prepared the way in phases one and two, the Bourse will be able to bill its fees to the entity owning the MX account code and conducting the trading, rather than to the CDCC subaccount. The account code to be used is the MX account field that is already populated by MX Approved Participants when they enter orders and allocate positions. To aid in reconciliation, fields for the account code and for the fee program associated with the code will be included in reconciliation files. Please note the CDCC subaccount will continue to be included in the reconciliation files.

Derivaties Technical operations
Toll-free: 1-877-588-8489
Telephone: 514-871-7872
Email: derivatives.operations@tmx.com