Alpha CEO sees strength under TMX-Maple's wing

Thu Dec 15, 2011 5:22pm EST
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By Jennifer Kwan

TORONTO (Reuters) - Canada's financial trading system would grow stronger under a plan that envisions the country's dominant exchange operator taking charge of Alpha Group, its main competitor, according to Alpha's chief executive.

The Alpha takeover proposal is part of a sweeping plan by Maple Group, a consortium of 13 Canadian financial institutions, to buy TMX Group (X.TO: Quote), the operator of the Toronto Stock Exchange, for C$3.8 billion ($3.67 billion).

But the deal hinges on regulatory approval of a side deal to buy Alpha - a so-called alternative trading system that recently became a full-fledged exchange. If Alpha and TMX were combined, the enlarged entity would control about 80 percent of Canadian stock trades, raising the possibility that regulators will shoot down the deal.

"I am very supportive of the vision," Alpha Chief Executive Jos Schmitt told Reuters in an interview on Thursday. "I don't see any reasons why it would be impossible to execute upon that vision."

"By bringing all those entities together, you bring together a lot of components that, if you combine them, you create a stronger entity," he said, declining to comment on the public criticism of the plan.

A recent drop in TMX's share price to Thursday's close at C$41.61, compared with Maple's C$50 bid, suggests growing doubts by investors that the Competition Bureau will allow the deal without big revisions.

Alpha's trading venue, set up in the fall of 2008 by some of Canada's top institutional shareholders, now commands nearly a 20 percent share of Canadian stock trading.

PRICE CONCERNS   Continued...