Regulator seeks information on TMX bidder

Canada’s antitrust regulator has asked for more information from the consortium of banks and other financial institutions seeking to acquire TMX Group, operator of the Toronto and Montreal exchanges.

Antitrust concerns are the key stumbling block for Maple’s C$3.8bn (US$3.96bn) hostile bid, the only offer still on the table after the London Stock Exchange failed last month to secure sufficient support from TMX shareholders for an agreed merger.

Disclosing the Competition Bureau’s move on Monday, the 13-member Canadian consortium, known as Maple Acquisition, said that the request was expected given the scale and scope of the proposed C$3.8bn deal.

Maple did not elaborate. The bureau has declined to comment on its investigation.

"We are pleased with the progress we are making on regulatory matters related to our bid,” said Luc Bertrand, vice-chairman of National Bank of Canada and an architect of the deal.

The Maple group, led by four of Canada’s big banks, has presented itself as a national champion that will bolster the TMX’s profitability by creating a so-called “vertical silo”.

Maple proposes folding into TMX an alternative trading platform owned by the banks, known as Alpha, and CDS Canadian Depository Services, the main securities clearing house in which the banks are also big shareholders.

But its bid has raised concerns about conflicts of interest and concentration of power among the banks. TMX and Alpha between them handle 83 per cent of equities trading in Canada.

Maple contends that this figure does not tell the full competition story because the most-heavily traded Canadian stocks are also listed on US exchanges.

Some analysts predict that Maple will need to make significant changes in its proposal to win Competition Bureau approval. One frequently mentioned possibility is for the banks to close down Alpha.

Meanwhile, Ontario’s finance minister told Canada’s Financial Post last week that Maple and TMX were in discussions. Maple had been precluded from talking to TMX while the London Stock Exchange bid was alive.