Analysis: Legal burdens weigh on LSE-TMX "London Bridge"

Fri Feb 11, 2011 4:03pm EST
 
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By John Mackie

TORONTO, Feb 11, (Westlaw Business) - The blockbuster merger bridging the London and Toronto Stock Exchanges may have been announced, but this London bridge may yet fall under the sheer weight of staggering legal complexity.

A broad group, from AIM to Borse Dubai, and from the Montreal Exchange to Borsa Italiana, stand to be affected by issues surrounding the London Stock Exchange's merger deal with Canadian exchange operator TMX Group.

And what a set of issues it is, ranging from post-Potash foreign investment concerns, to restrictive provincial securities laws, to undertakings regarding corporate governance. Even legacy contractual commitments from past acquisitions by the Toronto Stock Exchange (TSX) must be considered. Global markets affecting everything from equities to derivatives to venture funding await.

Of course, if it does stay standing, the London-Toronto structure, reported to be a $4 trillion transaction, would bridge not only the LSE and TSX, but also the venture-oriented AIM and TSX Venture Exchange, and significant foreign players including Borsa Italiana and Borse Dubai.

Together, the parties represent 20 trading markets/platforms across North America and Europe, with major positions in equities, derivatives, energy and fixed income. The list of markets within the group also includes the Montreal Exchange, and the Natural Gas Exchange.

LISTINGS LEADER

Once united, the combined group would become the global leader in number of listings (over 6,700), with a dominant position in natural resources, mining, energy and clean technology.

Listed companies would include not only domestic Canadian and British businesses, but many others with origins around the world that have turned to these exchanges for their access to deep capital pools and their expertise in industries from commodities to shipping. The megalith would offer listing, trading and post-trade services, along with global information services and technology solutions.   Continued...