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Canada's CSD holding up Maple bid for TMX
31 January 2012 Toronto
Reporter: Anna Reitman

Image: Shutterstock
Competition concerns have pushed back Maple Group's bid for Canada's national exchange one month as regulators mull over pricing implications for the Canadian Depository for Securities (CDS).

As part of the bid, Maple would take control of CDS and change it to a for-profit model as opposed to its current cost recovery model.

Speaking to Reuters, Peter Block, spokesman for Maple, said the group's recent submissions on pricing for CDS should allay concerns raised by regulators and market participants.

"We certainly believe that it is possible to have a competitive, fair CDS that is still profitable in a for-profit model without it coming at the expense of market participants just paying more for the same thing. That's never been our intent."

Maple is a consortium of 13 of Canada's financial institutions and pension funds. Apart from taking over CDS, Canada's dark pool, Alpha, is also up for grabs. That would mean that TMX's largest competitor would come under the same ownership. Moreover, some Maple investors are also Alpha owners. The links raise competition concerns which will require regulatory approvals from securities regulatory authorities and the Commissioner of Competition.

Speaking on behalf of Maple, Luc Bertrand said, "We continue to believe the Maple transaction will substantially benefit Canada's capital markets and its participants, improve the ability of market participants to manage risk and encourage the development of new offerings. We are committed to the transaction and are working diligently to obtain the required regulatory approvals. To this end, we are in ongoing discussions with the regulators and have made numerous submissions to them, including recently submitting a proposed CDS pricing model and proposing remedies to address concerns regarding equities trading."

Maple's CAD 3.8 billion offer is part of an integrated acquisition transaction to buy out TMX. The extension to 29 February is for the first phase of acquiring a minimum of 70 per cent and a maximum of 80 per cent of the Group's shares.

"Maple is continuing to seek to resolve outstanding issues and concerns raised by the securities regulatory authorities and the Competition Bureau. However, there can be no assurance that remedies short of a Material Detriment will address the issues and concerns raised by the securities regulatory authorities and the Commissioner or that the required regulatory approvals will be obtained," Maple said in a statement.



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