Maple says TMX deal could give OSC a pricing role

Thu Dec 1, 2011 6:16pm EST
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By Jennifer Kwan and Pav Jordan

TORONTO (Reuters) - The Canadian consortium seeking to buy TMX Group, operator of the Toronto Stock Exchange, said on Thursday it could give regulators the right to supervise clearing and settlement prices in order to gain approval of the C$3.8 billion (C$3.76 billion) takeover deal.

Under its TMX takeover proposal, the Maple Group consortium of Canadian financial services companies wants to also buy Canadian Depository for Securities (CDS), which clears and settles trades in Canada. This aspect of the deal has spurred fears of an unfair monopoly, and Maple said it is ready to compromise to get the deal done.

"We will be announcing a model and a structure and so forth with regards to fees," Luc Bertrand, the public face of Maple and vice chairman of National Bank Financial, told a public hearing held by the Ontario Securities Commission (OSC).

"Our proposal would be that the model would be part of the recognition order, which, in our view, would give the commission the ... explicit responsibility on a go-forward basis to ... reject or approve fees."

Bertrand said Maple remains committed to a one-tier system that keeps fees accessible for all market participants.

Maple's offer to take over the TMX Group is contingent on it also getting regulatory approval to buy CDS as well as Alpha Group, TMX's top stock trading competitor.

"Our deal is based on getting regulatory approval for both. If we don't have Alpha or we don't have CDS there is no Maple transaction," Bertrand said in an oft-repeated pledge.

CDS handles all of the back-office processing of cash and securities after a trade is made, acting as a central counterparty for trades.   Continued...