Law Firm: Stock Market Consolidation
The ongoing battle for control of TMX Group Inc. — which itself recently bought a 16 percent stake in the Bermuda Stock Exchange [BSX] — is indicative of a global wave of consolidation in the stock exchange sector, says one of Canada’s preeminent business law firms..
An aborted merger between Canada’s TMX and the London Stock Exchange Group plc [LSEG] and the current proposed take-over by Maple Group Acquisition Corporation illustrate the trends driving consolidation in the global exchange industry and the political and regulatory challenges posed by stock exchange mergers, say lawyers at Osler, Hoskin & Harcourt LLP.
“This latest round of stock exchange consolidation has been driven by increased competition, the globalisation of capital markets and the benefits of economies of scale in developing capital-intensive technology platforms for trading, clearing and settlement,” says the law firm in an analysis of the TMX take-over saga released today [Jan. 24]. “In particular, traditional stock exchanges have been losing significant market share in their cash equities businesses to alternative trading systems, and are looking to diversify and acquire higher margin derivatives and clearing and settlement businesses.”
TMX, the owner of Canada’s main exchanges, purchased a 16 percent holding in the BSX in December, becoming one of its largest shareholders.
Tom Kloet, the chief executive of TMX, joined the board of directors of the BSX which specialises in niche capital markets segments such as insurance-linked securities.
“This investment represents TMX Group’s commitment to looking beyond Canada for opportunities,” Mr. Kloet said in a statement.
The Maple Group — a consortium backed by some of Canada’s biggest banks and pension funds — hopes to buy TMX for $3.8-billion..
