RBC says more study on fees needed in TMX deal

Tue Jun 5, 2012 7:07pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Royal Bank of Canada, the country's biggest bank, wants regulators to tighten rules on trading, clearing and settlement fees as part of any deal to approve the Maple Group's proposed C$3.8 billion ($3.66 billion) takeover of the Toronto Stock Exchange operator.

RBC, one of only two leading Canadian banks that is not a Maple Group member, said it supports the deal to take over TMX Group Inc largely in the form the consortium negotiated with the Ontario Securities Commission. Even so, it supports further scrutiny of pricing models proposed for fees charged by the enlarged exchange operator.

Maple, which comprises most of Canada's biggest banks as well as pension funds, Canada's largest insurer and other financial groups, wants to combine TMX with bank-owned Alpha Group, Canada's second-biggest stock trading venue.

It also wants to wrap in the Canadian Depository for Securities Ltd, the clearing system for securities trades.

"Our key concern is that the Maple transaction will require a significantly different approach to the regulation of fees and fee models in Canada in order to compensate for the removal of effective competition for trading venues and the transformation of CDS into a profit-making venture," said Greg Mills, RBC's global co-head of equity trading, in a signed submission to the OSC dated June 4.

Toronto-Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and National Bank of Canada are Maple members.

RBC is the only one of the Canada's big six banks that has no ties to the Maple Group. Bank of Montreal is not part of Maple because it is advising TMX Group on the proposed deal.

In early May, the OSC published draft rules on how a combined Maple-TMX Group entity would operate. At the time, Maple said it could live with the draft orders, while Canada's Competition Bureau has said the draft orders could, depending on what they finally look like, substantially mitigate their serious concerns   Continued...

A Royal Bank of Canada (RBC) sign is seen in downtown Toronto March 3, 2011. REUTERS/Mark Blinch