Quebec hearing lifts Maple's hopes on TMX takeover

Thu Nov 24, 2011 3:59pm EST
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By Louise Egan and Leila Lemghalef

MONTREAL (Reuters) - A Canadian consortium aiming to buy the operator of the country's largest exchanges said the C$3.8 billion deal would likely win regulatory approval, its hopes boosted by a first day of hearings on Thursday.

In an appearance before regulators in the French-speaking province of Quebec, Maple Group defended its proposal to buy TMX Group against criticism it would create a monopoly and squash competition. Maple is comprised of 13 of Canada's most powerful financial institutions.

"There was nothing there that was troubling for us, they were completely understandable questions. I think we answered well ... and can go ahead with our project on this basis," Luc Bertrand, chief representative of Maple Group and vice-chairman of National Bank Financial (NA.TO: Quote), told reporters after the session. National Bank, based in Montreal, is a Maple member.

TMX operates the Toronto Stock Exchange, the Montreal Exchange derivatives market, and the TSX Venture exchange for small-capitalization companies, among others.

Maple's proposal would put TMX-owned exchanges, plus some clearance and settlement bodies that it runs, under the wing of the country's securities dealers, also owned by the big banks. Such an arrangement is similar to a model used at Germany's Deutsche Borse, Brazil's Bovespa and others.

That has raised concerns about conflict of interest and the creation of an entity so dominant that it would raise costs for customers and hinder competition.

Shares of TMX rose 0.22 percent to C$44.75 on Thursday in Toronto, hovering about 10 percent below Maple's C$50-a-share bid price. The shares were not traded on the New York Stock Exchange, which was closed for U.S. Thanksgiving Day.

MONTREAL'S STATUS   Continued...