A committee of Ontario legislators made nine recommendations on Tuesday on the London Stock Exchange's $3-billion takeover bid for TMX Group, owner of the Toronto Stock Exchange, but took no position on whether the deal should go ahead.
The recommendations -- centring on regulation, structure, jobs, decision-making and the mining sector -- include a request that the number of directors resident in Canada equal the number resident outside Canada, and that regulators from Ontario and other provinces oversee any fundamental changes to the new group's businesses.
"Under the terms of the proposed merger, the centre of gravity in regards to the decision-making ability of Ontario and Canada will move to London," said a cautious Gerry Phillips, chairman of the select all-party committee of the Ontario legislature.
The proposed takeover of TMX Group by the LSE would create a $7-billion transatlantic exchange and create a powerhouse in mining and resource equities, doing $4 trillion in annual trading. Along with the Toronto Stock Exchange, TMX Group owns the TSX Venture Exchange for small-cap companies and the Montreal Exchange, Canada's main derivatives bourse.
Opponents to the deal -- including some of Canada's largest banks -have complained from the start that a deal would wrest Canada's control of its capital markets and hand it to a holding company in London.
In its report, the legislative committee challenged the TMX and LSE to make their tie-up a true "merger of equals" as per their original language when they proposed the deal.
The committee's recommendations are not legally binding, but they paint a road map for regulators who will decide on the deal in coming months at the provincial and federal levels.
Related Stories
