TMX Group shareholders
approval of Maple Group Acquisition Corporations
tender offer on July 31 ended the multi-year sale of the
Toronto Stock Exchange and concentrated trading and clearing
services under a for-profit company. But the move has also
raised concerns over market favouritism.
Maple, a consortium of investment banks, pension
funds and other financial companies, also
acquired the Canadian Depository for Securities Limited
(CDS), Canadas dominant clearing house, and Alpha
Group, Canadas largest alternative trading system, as
part of the deal.
It is hoped the merger will provide Canada with a
higher profile internationally, and that that will help
attract foreign investors.
The merger provides the integration of trading
and clearing, Ian Russell, president and CEO of the
IIAC, told IFLR. Many say that will provide
important synergies that will lead to efficiencies and
But he added he wanted to work with regulators to
build an efficient regulatory framework to ensure the merger
did not inhibit market fairness.
Concerns have been raised regarding the possibility
that Maple could potentially manipulate trading and clearing
costs, favour its own clearing house over possible
competitors and charge unfair costs for market data. Canadian
securities regulators proposed
behavioural remedies intended to mitigate these concerns
in approval of the tender offer last month.
I think the regulators have done a good job in
demanding a lot of concessions out of Maple, Russell
The IIAC is in the process of creating an oversight
committee to provide industry expertise to regulators and
assist in the creation of an official compliance program for
the new company.
The compliance programme could result in expensive
new trading infrastructure and higher user fees for traders
as a result. Any pricing changes will also have to be
approved by regulators.
We expect there will be a lot of requests
coming out of Maple for price increases, Russell said.
I think that is to be expected [because] there are
going to be technological changes and
Approximately 91% of outstanding TMX Group shares
were deposited in Maple at $50 per share for a grand sum of
roughly C$3.8 billion. The offer was extended to August 10 to
allow any remaining TMX shareholders to sell their