It was quite ironic that the CEOs of stock exchanges in London and Toronto to speak at the press conference announcing their intention to merge. While the CEO of the Toronto Stock Exchange, Tom Kloet, addressed the media in English only, the CEO of the London Stock Exchange, French Xavier Rollet, chose to speak first in French. In the opinion of many experts, this unusual situation where a foreigner speaks both official languages better than a local boss, a good illustration could represent the chance to finance the sale of the Montreal TMX to a European entity that will make the world specialist in mining.
While the city of Toronto will suffer a loss of relative influence, Montreal could become a hub for derivatives on a broad scale. This could be achieved provided that Quebec plays its cards right and make sure to maintain its expertise in this emerging area.
Julien Béliveau, an analyst at Money and former portfolio manager, says that Montreal will benefit from the transaction due to higher transaction volumes and increased liquidity it will lead to the Toronto Stock Exchange.
He does not believe either that the London Stock Exchange wants to move the platform Montreal Exchange derivatives. "Montreal is the pearl of TMX Group. Things are going well in Montreal, incomes are rising. You do not change something if there is no problem, "he said.
Denis Durand, partner at Jarislowsky Fraser, goes even further by saying that Montreal could inherit jobs currently located in London. He stressed that the computer system Sola, developed by the Montreal Exchange is already employed by the London Stock Exchange.
"TMX Group has no choice but to merge. Increasingly, banks want to perform transactions 24 hours a day, that only one group present on several continents can offer, "he said.
By press release, the Minister of Finance of Quebec, Raymond Bachand, adopted a cautious attitude vis-à-vis the transaction.
"The transaction fits in a global consolidation of exchanges. Therefore, the priorities advocated by the Government of Quebec to the Montreal Exchange are the development of derivatives sector as well as protection of technological leadership that is related, "he said.
Minister Bachand wished to recall that under the law and because of commitments made by TMX Group to the AMF in connection with the combination of the TSX and Montreal Exchange in 2008 The transaction is subject to approval by the AMF. "I actually asked it to, on behalf of the public interest to hold public hearings," he reported.
A sale rather than merging
Unlike Montreal, Toronto risks losing a headquarters if the merger happens. For the lawyer Jean-Pierre Chamberland, of Fasken Martineau, we must not delude ourselves about the nature of the transaction.
Although the London Stock Exchange Group and Groupe TMX speak of a "merger of equals", it is indeed an acquisition. I Chamberland said that the London Stock Exchange will monitor the board of the merged entity being able to appoint eight members to five. It is also the CEO of the London Stock Exchange to lead the new entity.
When the transaction is completed, shareholders of London Stock Exchange Group will own 55% of the merged group, while those of TMX will have 45%.
In the Toronto media, we felt a certain fear about the transaction, the Queen City is not accustomed to do so to dethrone the benefit of another financial center.