* Recommendations to be released mid-afternoon Tuesday
* Conditions seen focusing on Canadian board control
By Pav Jordan and Claire Sibonney
TORONTO, April 19 The London Stock Exchange's
proposed C$3 billion takeover of TMX Group (X.TO), owner of the
Toronto Stock Exchange, is likely to pass its first test on
Tuesday with a panel of Ontario legislators set to support the
bid with certain conditions.
The all-party committee of members of the provincial
legislature will release its recommendations at mid-afternoon.
While not legally binding, the report will set the tone for a
complicated approval process to unfold over coming months that
will involve provincial and federal regulators.
The committee's conditions will likely focus on protecting
Canada's interests in the event of a subsequent exchange
consolidation following the LSE-TMX deal. They will include
demands about Canada's weighting on the board of directors of
the new company.
As it stands, TMX will hold seven of the 15 positions on
the LSE-TMX board, with the remaining eight positions going to
the LSE, with board members coming from and Italy.
The committee -- which was set up by the government of
Ontario, home to Canada's financial capital Toronto -- is also
expected to demand more clarity on regulatory control of the new
The takeover requires the approval of the Ontario
Securities Commission and several other provincial regulators.
It must also must be shown to be of "net benefit" to Canada
under the Investment Canada Act of 1985, a test that has seen
two deals vetoed, both by the current government of
Conservative Prime Minister Stephen Harper.
May 2 is federal election day in Canada and it is possible
there will be a new government in place after that, although
the Conservatives are leading in the polls.
"(The recommendations) will certainly be considered by the
provincial regulators, by anyone that is presenting to the
provincial regulators, by the politicians in the current
election, and by the net benefit test that Industry Canada is
going to do," said Alison Crosthwait, director of global
trading strategy at Instinet.
The London Stock Exchange (LSE.L) officially launched its
bid for TMX on Feb. 9, promising to create a giant
transatlantic bourse trading C$4.1 trillion of stock a year.
The proposal sparked immediate concerns from politicians
and some of Canada's largest banks, which worried it might see
the country lose control of its capital markets to London.
"We sought the advice of the legislature and I'm looking
forward to getting their report," Ontario Finance Minister
Dwight Duncan, who expressed concerns about the deal after it
was announced, said last week.
"We take the advice of the legislature very seriously and
I'll look forward to seeing what the actual recommendations
The committee's recommendations will not be unanimous. The representative
of the left-leaning New Democratic Party, who opposes the deal, has already
said he will file a minority report.
(Additional reporting by Solarina Ho; editing by Peter