Why Executives Need Full-Market Data: Risks of Decision-Making with Partial Data on TSX, TSXV, and CSE
Published by Adaptive IR
TL;DR
Executives and IR professionals at publicly listed companies on the TSX, TSXV, and CSE face major risks when making decisions with only partial data. Up to 50% of trading volume happens through alternative trading systems (ATSs) that are often hidden from view. Adaptive IR closes this gap by providing full visibility into both primary and ATS trades, and broker activity, empowering leaders with comprehensive market insights for smarter, data-driven decision-making.
Understanding ATSs and Market Fragmentation on TSX, TSXV, and CSE
In recent years, alternative trading systems (ATSs) have become a significant part of the trading ecosystem on Canadian exchanges, often contributing to more than 40-50% of trading volume for TSX, TSXV, and CSE listed names. ATSs offer benefits like reduced trading costs and increased efficiency, but they also create market fragmentation. This fragmentation results in critical gaps for public companies, as large portions of market activity remain hidden from public view. Executives and IR professionals without visibility into these hidden trades risk overlooking essential insights into market sentiment and activity.
The Risks of Relying on Incomplete Data for Market Decisions
Studies in behavioral economics and decision theory, such as those by Kahneman and Tversky, highlight how relying on incomplete information can lead to cognitive biases, distorting risk assessment and impacting decision quality. For example, research on the cost of poor data quality highlights that limited or inaccurate datasets can lead executives to misinterpret key metrics, such as volume trends, by substantial margins, affecting decisions that rely on precise market understanding.1
- Confirmation Bias: Decision-makers may reinforce preconceived notions when they only view data from traditional exchanges, underestimating the impact of ATS trades.
- Availability Heuristic: There’s a natural tendency to prioritize easily accessible data, which can distort perceptions of market activity and fail to capture hidden ATS trades.
Without a full view of the market, executives may unknowingly base decisions on skewed interpretations, leading to costly consequences.
How Incomplete Market Data Impacts Executives and IR Professionals on Canadian Exchanges
Partial visibility into trading volumes directly affects interpretations of investor sentiment, share price movements, and volatility. Executives may incorrectly attribute share price fluctuations to market sentiment or trading anomalies, without realizing that hidden ATS trades play a significant role. It stands to reason that companies with more complete data are better positioned to craft strategy and offset the negative pressure that off-exchange trading can deliver.
Economic Implications of Decisions Based on Incomplete Market Data
Financial decisions made without full data access can lead to higher volatility and inefficient price discovery. Research published in a study by APTISI Transactions on Management (2023)2 emphasizes that decision-making heavily relies on data quality, showing that errors in data often lead to financial misjudgments and misaligned strategies. Without Adaptive IR’s insights into ATS activity, executives may misjudge liquidity events, potentially leading to costly buyback programs or misleading stockholder communications that don’t reflect actual trading patterns.
Enhanced Decision Making with Comprehensive Market Visibility
Access to full market data from Adaptive IR can significantly improve the quality of executive decisions, reducing biases and misinterpretations. Research from the Harvard Business Review emphasizes that organizations with richer data sources experience enhanced strategic decision-making, lower uncertainty, and increased market confidence.
Adaptive IR’s platform offers this full visibility, empowering executives and IR professionals to make informed choices that support stability and growth. By mitigating the risks associated with partial data, companies can better respond to market trends proactively and to better meet investor expectations.
What’s Next?
Discover how Adaptive IR’s full-market data insights can provide your company with the clarity needed to make informed decisions in today’s fragmented market. Contact [email protected] for more information.
1. The Cost of Poor Data Quality: Understanding the Impact on Business, Do The Data
2. Exploring the Impact of Data Quality on Decision-Making Processes in Information Intensive Organizations, APTISI Transactions on Management
3. Data and Intuition: Good Decisions Need Both, Harvard Business Review