Queue position is a form of risk, not just a time delay, and that market makers react to that risk by withholding liquidity. A queueing model applied to a price-time priority market finds losses to depth of as much as 8%. This inefficiency does not exist in pro-rata systems (though they have their own problems).
High-frequency traders in Canadian bond futures mainly act as tiny, fast liquidity buffers for big institutions, not as predators pushing their costs up.
High-frequency traders on Canada’s Alpha exchange end up looking more like Cournot quantity competitors than razor‑thin price undercutters. Their rivalry makes markets smoother and cheaper for everyone else, as expected in Cournot competition.
Securities‑financing markets in Canada (repos and securities lending) are the plumbing that lets a relatively small stock of government bonds support ever‑rising trading volumes.
Institutional investors do sometimes make markets in Canadian bonds, but only at the margin, and mainly when dealers are stretched. Customer liquidity is small, expensive, and used as a back‑up source rather than a primary one.
Decimalizing options on the Montréal Exchange (moving sub‑$3 options from 5‑cent to 1‑cent ticks) tightened spreads, improved depth near the top of book, and made prices more efficient, with the biggest gains in out‑of‑the‑money names.