March 16, 2012 / 3:47 AM / in 6 years

Toronto Stock Exchange volume to stay low, operator TMX says

BOCA RATON, Florida (Reuters) - The Toronto Stock Exchange’s trading volume will likely remain sluggish compared to last year, partly because of the low volatility in the market, its operator TMX Group said on Thursday.

Trading volume through the end of February was down about 16% from the previous year as high frequency traders appear to have reduced their activity, TMX Chief Executive Tom Kloet said on the sidelines of a futures industry conference in Florida.

Kloet discussed the setback in volume after a C$3.8 billion ($3.83 billion) bid to take over the operator of the Toronto exchange came closer to winning provincial approval, driving up shares of TMX Group.

“Is this something we’re going to live with for awhile? It probably is,” he said about the drop in volume.

Kloet said he was not “spooked” by the decline because volume grew significantly last year. He said exchange data indicated high frequency trading had fallen.

“I want it to be higher,” he said about total trading volume.

Maple Group, a consortium of 13 banks and other financial institutions, is seeking to control exchanges already owned by TMX; Alpha Group, the Toronto Stock Exchange’s biggest competitor,; and the Canadian Depositary for Securities, or CDS, a clearing house run by some of the banks that belong to Maple.

Kloet, who supports the bid, said TMX would expand regardless of its outcome and that he was particularly interested in opportunities outside Canada. The company recently bought a connectivity business in the UK and a software business in Australia.

“We’ve done the Canadian thing,” he said.

Kloet said Maple executives have made it clear that they want him to stay in his position if the takeover deal is approved and that he intends to do so. A competition review could still spoil the deal.

Editing by Ramya Venugopal

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