TMX says "cross-ocean" mergers difficult

Thomas Kloet, CEO of the Toronto Stock Exchange, speaks at the Reuters Exchanges and Trading Summit in New York May 13, 2009.

NEW YORK (Reuters) - The head of Toronto Stock Exchange operator, TMX Group Inc (X.TO) said on Wednesday transatlantic mergers were difficult to implement, but ones executed in the same country fare better.

Thomas Kloet told the Reuters Exchanges and Trading Summit in New York cultural and regulatory differences make mergers pretty hard to do "especially when they start passing over salt water.

"A number of these cross-ocean strategies, I'll call them, have been pretty difficult to implement. A number of them have not resulted in the synergies that have satisfied the needs of some of their stakeholders including their shareholders," he said.

But, he added, that the domestic mergers "have been executed pretty well."

TMX acquired the Montreal Exchange derivatives market last year.

More recently, TMX, which also operates the small-cap TSX Venture Exchange, announced a partnership where TMX will take a 19.9 percent stake in EDX London Ltd, while EDX will use the Toronto bourse's derivatives trading technology.

EDX London is the London Stock Exchange's (LSE.L) equity derivatives business.

TMX also recently completed its acquisition of NetThruPut Inc, an electronic platform and clearing facility for physical crude oil products, from Enbridge Inc and Circuit Technology Ltd.

Going forward, Kloet sees the possibility of a small-cap exchange model like the TSX Venture Exchange working well in the United States.

"That is something that we'll continue to look at and perhaps partner with somebody on, or look for opportunities there," he said, noting similar partnerships could be viable in listings and market data.

(For summit blog: blogs.reuters.com/summits/)

(Reporting by Jennifer Kwan, editing by Leslie Gevirtz)