* ASX/SGX deal seen vetoed on national interest grounds
* Analyst says deal, report delay could be election issue
* Ontario lawmaker says Australia doing right thing
By Solarina Ho
TORONTO, April 5 (Reuters) - Australia's veto of a foreign bid for its main stock exchange will make it easier for Canadian regulators to block London's offer for stock exchange operator TMX Group (X.TO) as a looming federal election further politicizes the controversial deal.
But there will be no decision for months on the Canadian proposal, given that TMX and the London Stock Exchange (LSE.L) have yet to submit documentation surrounding the LSE's $3 billion offer and the government then has 45 to 75 days to review the papers, with allowances for further extensions.
"I think it certainly increases the risk that it would be turned down," John Gravelle, a national mining leader at PricewaterhouseCoopers, said of Australia's likely rejection of Singapore Exchange Ltd's (SGXL.SI) $7.8 billion bid for ASX Ltd (ASX.AX) on national interest grounds. [ID:nL3E7F50PP]
"Now there is a precedent out there for countries rejecting this under their equivalent of the Investment Canada Act."
The Investment Canada Act says government officials must examine whether a foreign bid for a domestic company is of net benefit to Canada, although exactly what that means is open to interpretation.
Provincial regulators, including those from Canada's business center of Ontario, must also approve the deal.
Canada dented its open-for-business reputation when the federal government vetoed last year's offer for fertilizer giant Potash Corp on the grounds there was no net benefit. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ANALYSIS-Regulators kingmakers in NYSE fight [ID:nN04281862] BREAKING VIEWS-Exchange nationalism foolish [ID:nLDE72M0R8] Graphic-Exchanges compared link.reuters.com/gab88r Take-a-look on exchange mergers [ID:nLDE7301C4] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Australia and Canada are both resource focused Commonwealth countries, and both country's exchanges carry a large percentage of the world's mining companies.
Those similarities could resonate in Canada should the Australian exchange deal be scuppered as expected.
An Ontario all-party legislative committee had been set to report back on its views this week. But the province said on Tuesday it had delayed that report until April 21, just a week and a half before the May 2 federal election.
"We're in the middle of an election, anything can become political really quickly... I think it will be used as a political issue and I don't think anyone's going to be able to convince the public that it's a good thing," said Alison Crosthwait, director of global trading strategy at Instinet.
Ontario's all-party report is not legally binding, but it is expected to carry weight with provincial securities regulators, and with federal government officials.
"I believe (Australia's) doing the right thing and that's the question we have to ask ourselves here in Ontario," said Gilles Bisson, the only member of the left-wing Ontario New Democratic Party on the provincial review committee.
"I think (Australia's decision) reflects what the public feels and I think it reflects also what a lot of people in the capital markets feel. If you can't control those markets, what the hell are you as a nation?"
But not everyone views the bids as comparable.
"It's a very different deal," said Renee Colyer, chief executive of Forefactor, Inc, a global markets research and consulting firm, noting that a London-Toronto exchange grouping would be more like a merger of equals than the Australia-Singapore one would have been.
"Just because one country does it, it means we should do it too? That doesn't make any logical business sense from a business perspective." ($1=$0.97 Canadian) (Additional reporting by Claire Sibonney and Pav Jordan; editing by Janet Guttsman)