Today’s hearing in Ontario on the proposed TMX Group Inc.-London Stock Exchange Group PLC is the latest conversation between the conflicting interests of banks and industries.
Opinions on the merger vary between being described as a merger of equals and a takeover of the TMX Group. Passing of the merger requires approval by a number of provincial regulators and the federal government under the Investment Canada Act.
Canadian politicians have expressed concern about the impact of having Canada’s major financial markets included in an international group. They fear losing financial influence as a country as well as control over Canada’s financial markets.
A report Wednesday says that the Toronto-Dominion Bank, National Bank of Canada, Canadian Imperial Bank of Commerce and the Bank of Nova Scotia are writing a public letter outlining their opposition and concerns about the merger.
This letter, reportedly titled “Let’s build on a Canadian success story”, argues that TMX is already a viable global identity and that merging it with LSE could severely and irreversibly set back Toronto’s influence as a financial hub. According to the report, the Bank of Montreal and Royal Bank will not be a part of the letter due to their role as advisers on the merger deal.
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The head of Caldwell Securities and Urbana Corp. Tom Caldwell thinks the influence of the banks might sway politicians to reject the proposed combination of TMX Group and London Stock Exchange Group PLC.
The four banks reportedly opposing TMX are all shareholders of Alpha Group, the competitor to TMX's Toronto Stock Exchange. There is speculation that the banks’ real reason for opposition is self-interest. By isolating the TMX in the global consolidation game, the Alpha Group’s strengthens its hold over Canada’s financial market.
The federal government has not made a decision and the debate about the merger continues.
Jim Prentice, a former federal Industry Minister who joined CIBC (Canadian Imperial Bank of Commerce) in November, said “we have several bodies… investigat[ing] this [transaction] and I think they clearly need to turn their attention to the nature of the conditions that would be attached [permanently]. So I think there’s a lot of work left to be done.”