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LSE-TMX backers warn of Maple monopoly
June 27, 2011 / 3:55 PM / 6 years ago

LSE-TMX backers warn of Maple monopoly

* LSE-TMX backers say Maple deal would kill competition

* Maple’s Bertrand says bid is not a “remutualization”

TORONTO, June 27 (Reuters) - A group that includes a number of independent Canadian financial firms has thrown its backing behind the London Stock Exchange’s (LSE.L) proposed takeover of TMX Group (X.TO) as the battle over the fate of Toronto Stock Exchange operator heats up ahead of a crucial vote.

The success of a rival bid for TMX by Maple Group, a consortium of 13 Canadian financial firms, would create a monopoly in which Canada’s exchanges would be owned and managed by many of their most powerful participants, the group of executives said in a statement on Monday.

“Our goal is to have exchanges that have independent ownership and management and that operate without conflict in a flourishing competitive market,” said the statement, signed by the heads of Caldwell Securities, Raymond James (RJF.N), CI Financial (CIX.TO), and Haywood Securities, among others.

A vote on LSE’s friendly offer for TMX is scheduled for Thursday and needs two-thirds approval to pass. [ID:nN1E75N0QW]

Maple’s hostile proposal includes a plan to buy and wrap in Alpha, Canada’s biggest alternative trading platform, which would give it control of nearly 90 percent of all equities trading in the country.

“This will virtually eliminate market competition,” the statement said, adding that Maple would control almost every aspect of access to financing in Canada.

Over the last 15 years, many of the world’s top exchanges began floating shares in a “demutualization” process that transformed them into competitive, profit-making companies while allowing their traditional seatholders to cash in.

Caldwell Chief Executive Thomas Caldwell has said that the Maple proposal would be a form of “remutualization,” allowing the exchange’s users to regain control.

“This is not a remutualization and anyone who says that is simply not telling the truth,” Luc Bertrand, Maple’s spokesman, and one of the architects of the present-day TMX, said on a conference call with analysts on Monday in response to the pro-LSE statement.

Last week, Montreal billionaire Stephen Jarislowsky, a vocal corporate governance champion and shareholder-rights activist, released a statement backing Maple, saying its diversity of shareholders should help allay fears that the powerful new grouping might boost listing and transaction fees. [nN1E75N0H5]

Signatories of the letters are:

John L. Albright, founder of JLA Ventures & Blackberry Partners Fund; Paul Allison, chief executive of Raymond James Ltd; Robert Blanchard, president of Haywood Securities Inc; John Tognetti, chairman of Haywood Securities Inc;

William Holland, executive chairman of CI Financial Corp; Eric Bushell, chief investment officer, Signature Global Advisors; Thomas Caldwell, chairman and chief executive of Caldwell Securities Ltd;

Rowland Fleming, former chief executive of TSX; Gordon Keep, executive vice-president of Fiore Financial; John MacPhail, president of Union Securities Ltd, and Hari Varshney, president of Varshney Capital Corp. (Reporting by John McCrank; editing by Rob Wilson)

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