Alpha says Maple's impact on competition uncertain

TORONTO Mon May 16, 2011 3:42pm EDT

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TORONTO (Reuters) - Alpha Group, an alternative trading system at the center of a takeover proposal for the operator of the Toronto Stock Exchange, said on Monday it was too soon to say if such a deal would trigger competition issues.

Alpha, which has taken nearly 20 percent of the market for Canadian stock trading since it opened in 2007, is owned by many of the same Canadian banks and pension funds that would buy the TMX Group under a proposal put forward by Maple Group Acquisition Corp.

In addition to the Toronto Stock Exchange, TMX owns the TSX Venture Exchange for small-cap stocks. Combining Alpha with those exchanges would give Maple about 80 percent of the market, raising concerns that its proposal would create a near monopoly.

"We don't really have sufficient information from the initial take to provide an opinion on what it would mean or whether it would lead to any competition related issues," Alpha CEO Jos Schmitt told Reuters.

"We don't know what direction the future will take. There are now multiple scenarios ahead of us."

Maple put forth a C$3.6 billion ($3.7 billion) proposal over the weekend to buy TMX and thwart a $3 billion friendly bid by the London Stock Exchange.

Schmitt says Alpha has been "fenced off" from the Maple discussions and it was adopting a neutral stance on its proposal.

Alpha has already filed for exchange status with regulatory authorities, a process it hopes to be completed this fall. If exchange status is granted, Alpha could offer stock listings, putting it in more direct competition with TMX.

"For us it's business as usual. We're going to continue full speed ahead with all our initiatives and we're going to continue to leverage competition to fulfill our mandate," Schmitt said.

"I would not anticipate the fact of being an exchange or an alternative trading system to add any complexity to any future evolution that may come up."

(Editing by Frank McGurty)

($1=$0.97 Canadian)

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