TORONTO/NEW YORK, Aug 7 (Reuters) - Tom Kloet, who was initially set to bow out later this month as chief executive of Toronto Stock Exchange operator TMX Group Ltd, is now likely to stay on until at least October as TMX hunts for a long-term replacement, seven financial industry sources familiar with the succession process said.
Three of the seven sources, all of whom spoke on condition of anonymity because the process is not public, said the exchange operator is leaning heavily in favor of an external candidate, but that the board may fall back on an internal name if it is unable to find a suitable candidate from outside the company.
Those three Canadian-based sources also said TMX's board is working with global head hunting firm Korn Ferry in its search, and that a number of candidates that the headhunter had tapped have not tossed their names into the hat for a variety of reasons.
A decision on a successor to Kloet is still likely to be reached this month, even if the official handover takes a little longer than TMX had initially planned, two of the Canadian-based sources said.
A TMX spokeswoman declined to comment on the process.
TMX said in March that Kloet would retire at the end of August after being in the job six years, during which he oversaw the company's acquisition by a group of Canadian financial institutions, and the addition of a clearinghouse and a small stock exchange to the entities under its umbrella.
TMX is set to report its quarterly results after the close of trade on Thursday, and investors are keen to get some clarity on its succession plans.
A separate source said the selection committee recently held a final round of interviews with the four or five candidates who are frontrunners for the job.
Three other sources, based in the United States, said that one of the top contenders for the job had been former New York Stock Exchange executive Joseph Mecane, but that Mecane was no longer in the running.
Mecane declined to comment on the matter.
Two of the U.S.-based sources said that the other external candidates that had been tapped, but who may not be in the running, were the former chief operating officer of NYSE Euronext, Larry Leibowitz, and former Nasdaq executive Eric Noll, who now heads brokerage and trading firm Convergex LLC.
The two sources also said Chicago-based Raj Mahajan, the CEO of trading firm Allston, is one of the external candidates now in the running for the position.
Reuters could not immediately reach Mahajan, Leibowitz and Noll for comment.
The search committee has also collected resumes from within the company.
Alain Miquelon, who runs the TSX's derivatives-focused Montreal Exchange, and Kevan Cowan, president of TSX Markets and its group head of equities, are two of the internal names under consideration, the two sources said.
Kloet's successor faces the challenge of spurring growth at the Toronto Stock Exchange, which relies heavily on new issues and capital-raising by companies in the cyclical energy and mining sectors.
The exchange is also threatened by the likely emergence of a rival exchange to be operated by Aequitas Innovations, which last year outlined plans to launch a trading platform.
Reporting by Alastair Sharp; Editing by Peter Galloway