How will the TMX-LSEG Merger change Ontario’s economy?


What are the Business Community’s Top Concerns

While Londoners have not yet been too engaged in this issue, it will doubtless have an impact on how we do business. Following are some of the concerns and observations that have been shared with us by the Ontario Chamber of Commerce. We will continue to monitor this issue and provide as much insight as we are able.

The business community is concerned about the effect on the financial services industry following the merger. In particular, the effect on the job market of this sector which is crucial for Ontario’s economy and prosperity. There is still little information about the operation, which will be a merger of equals and not a deal, as erroneously mentioned in public opinion and the media.

SMEs and the mining sector are particularly concerned on how the merger will bring more access to international markets while still focusing on the specific sector peculiarity of TMX. The business community questions the merger’s advantages in terms of the reputation of Toronto as a ‘financial centre’ following the merger. There is also a concern that Ontario would experience a contraction in its financial services sector due to a downsizing of the Toronto Stock Exchange and interlinked economic activities.

Information the OCC has Obtained
• The Financial Services sector will remain a critical and important part of Ontario’s economy.
•The merger between TMX and LSEG will provide more international views of TMX listed companies. It will also create a tighter market with more liquidity.
•The more the market will be ‘global’ the more attractive it will be as a place to invest.
•This will serve to strengthen the sector. The merger will not bring reductions and cut growth and opportunities.
•The transaction is a merger of holding companies ‐ not exchanges. The existing
Canadian exchanges would stay in their current jurisdictions. Operations would be centralized, allowing for greater economies of scale.
•The individual exchanges would continue to be branded the same and retain their existing independence.
•TMX has been built on serving SMEs and the natural resources sectors (energy and mining). This particularity has made TMX one of the world’s leaders in these two sectors. After the merger, this focus will be maintained, as each exchange will continue to maintain their particularity and regulatory framework. As for derivatives, LSEG sees these sectors as the missing link to fulfill their deficiencies.
•There are several safeguards built into the deal which would protect Canada’s strategic interests. For example, the new Board of Directors would be comprised of 7 Canadians, 5 Brits, and 3 Italians, giving Canada a plurality.

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