* Ontario regulator looks to future as mulls TMX-LSE deal
* Exchanges insist deal is fair, say no need for change
(Recasts with comments from TMX/LSE)
By Pav Jordan and David Ljunggren
TORONTO/OTTAWA, March 10 The authors of a plan
to combine the London and Toronto stock exchanges insisted on
Thursday that the deal was fair, as regulators prepared to
review if the proposal is in the public's best interest.
Canada's top securities regulator said the continued
strength of Canadian equity markets will be crucial as it mulls
whether to support the London Stock Exchange's (LSE.L) C$3.1
billion bid for TMX Group (X.TO), parent company of the Toronto
Approval from the Ontario Securities Commission is one of a
series of green lights needed for the deal to fly. Other
provinces will also have a say, and federal officials must rule
if the proposal is of "net benefit" to Canada.
"I would like to emphasize that the OSC's role is not to
approve or reject the proposed transaction," commission Chair,
Howard Wetston, told an Ontario legislative committee that is
examining the transaction
After the session, he told reporters, "If we're
dissatisfied that the transaction in some way or another
doesn't meet our requirements, then the parties are going to
have to think about what they may need to do to address them."
But the architects of the proposal told reporters in Ottawa
that they had no plans for changes.
"We took a lot of time, a lot of care, a lot of effort in
putting it together ... We think it is absolutely the right
deal for both organizations and this is the deal we are now
taking to the marketplace," said David Lester, director of
information services at the LSE.
"We're listening ... and taking on board the feedback and
seeing whether we've missed anything... But as I say, the deal
we really did craft very thoroughly, in between two boards over
a number of months, and we believe it is the right deal."
Wetston said the OSC was well aware of increasing
competitive pressures, as well as the wave of consolidation
sweeping global exchanges. It can accept the transaction as it
stands, or make clear what changes are needed to reach a deal
that it finds palatable.
The Singapore Exchange (SGXL.SI) and Australian bourse
operator ASX (ASX.AX), who have been trying to complete a $7.9
billion tie-up, renegotiated their deal last month to give
Australia a larger presence on the combined company's board.
And Germany's Deutsche Boerse (DB1Gn.DE) has bid for the
New York Stock Exchange parent NYSE Euronext NYX.N.
Shares of TMX have traded below the offer value since the
start and the stock sank further on Thursday as opposition to
the transaction gained traction.
Critics include some of Canada's largest banks, who made
their views public on Wednesday.
How the LSE-TMX deal affects league tables [ID:nLDE7180IA]
Details of LSE-Toronto exchange deal [ID:nN08113490]
Ontario, home to the Toronto exchange, formed a legislative
committee to review the deal soon after the takeover was
proposed last month and after criticism mounted, led by Ontario
Finance Minister Dwight Duncan.
Pundits mostly expect the transaction will not go through
in its present form, saying a precedent was set when federal
Industry Minister Tony Clement blocked BHP Billiton's (BHP.AX)
takeover of Potash Corp (POT.TO) last year.
Half of Canada's big banks oppose the deal as it stands.
They told Ontario lawmakers that it will hurt Toronto's status
as a global financial center and make it harder for Canadian
companies looking to raise capital on public markets.
Wetston said the banks would have to talk to the commission
directly if they want the OSC to listen to their concerns.
He said the regulator -- the largest of 13 provincial and
territorial entities that regulate Canadian markets -- will
invite public comment as it conducts its review.
If the deal goes ahead, the OSC would have to approve
changes to the TMX rules, including one to allow a single
shareholder to own more than 10 percent of the exchange.
Wetston also said the OSC would need to determine
conditions for regulatory oversight of a merged LSE/TMX, and
will discuss this with the UK Financial Services Authority.
Michael Ptasznik, TMX's chief financial officer, said the
two exchanges were "working co-operatively" with Industry
Canada officials to draw up a timetable that would ensure both
Ontario and the province of Quebec could offer feedback.
He said the LSE and TMX hope to close the deal at some
stage in the third quarter of this year.
(Additional reporting by Claire Sibonney and Cameron French;
editing by Janet Guttsman)