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Ontario Finance Minister Dwight Duncan speaks at a Canadian Club of Toronto lunch in Toronto on Tuesday, December 14, 2010.NATHAN DENETTE/The Canadian Press

There's "clear angst" on both Bay Street and Main Street about a proposed merger between the Toronto and London Stock Exchanges, Ontario's Finance Minister said Wednesday.

The deal, which is under federal review, has sparked concerns even among people he thought would have embraced the merger, said provincial treasurer Dwight Duncan.

"I have talked to numerous people on Bay Street as well as Main Street, and there is a clear angst -- is the best way to put it -- on this, and a genuine desire on the part of everyone to look at these things carefully and decide what we believe," he said. "In fact, the word to me was, there are a lot of legitimate questions to be asked."

Mr. Duncan said his government had the same reaction to the merger, which made headlines last week.

But one 45-year veteran of the investment industry said he suspects Mr. Duncan is "overstating" the mood on Bay Street.

"I would be quite surprised if you talk to anyone in the securities business who had any angst about this," said Tom Caldwell, founder and chairman of Caldwell Securities Ltd.

"I think that's nonsense."

Mr. Caldwell said he's heard some objections from lawyers who fear they'll lose business, but he's "puzzled" by them because Toronto-listed companies would still have to comply with the provincial regulator.

"It's not going to cost any lawyers their jobs, it actually might increase it," he said.

"I think some of the objections have been founded on really not having enough adequate information."

Joseph Groia, a securities lawyer and former enforcement director of the Ontario Securities Commission, said there's a "fairly large" group who are waiting to hear the details of the transaction.

However, many of their initial concerns have been alleviated as more information trickles out, he said. But that could change.

"There's still relatively little in the documents that have been filed that explain all the details," he said.

"And I guess the old saying, 'the devil's in the details' remains to be seen."

Mr. Duncan seems to share those concerns, saying he needs more time to "sort out" what it all means for Ontario's economy and capital markets.

The Minister, who was privately briefed about the deal about a day before it went public Feb. 8, said he even tried Googling it over the weekend, but found there was little public discussion about what a merger would mean for Canada.

"These are important questions in an important area on a strategic asset," he added. "And I look forward to having a very robust discussion about all the questions."

Mr. Duncan said he'd speak Wednesday with federal Industry Minister Tony Clement about the 45-day review, which will look at issues like jobs, innovation and competition in determining whether the merger is of net benefit to Canada.

The transaction would merge the London Stock Exchange PLC with the TMX Group Inc., forming the world's eighth-biggest securities market.

However, it would give shareholders of the LSE somewhat more than half of the combined company's stock and board positions - something that has raised eyebrows at Queen's Park.

Ontario has the power to block the deal, but Mr. Duncan won't say whether the Liberal government is prepared to use it.

"I'm not ruling anything in or out at this point," he said.

Stock exchange mergers are happening around the world, Mr. Duncan acknowledged. This week, the storied New York exchange announced plans to combine with Frankfurt to create the world's largest financial markets company.

Ontario needs to consider where capital markets are headed in the future, but it must also ensure that it remains a leading financial sector in the world, he said.

"What is the appropriate relationship? Who should that be with? What does the construct look like?" he said. "I don't know the answers to those questions."

Depending on how the deal is structured, the merger could be a "tremendous economic boon" for the TSX if its listed companies are able to gain access to European and Middle East capital via London, Mr. Caldwell said.

London doesn't have a derivatives options business, which it could gain through the TMX-owned Montreal market, he said.

"This is probably a good business deal, however, politics will decide it," said Mr. Caldwell.

Four provinces - Ontario, Quebec, British Columbia and Alberta - have regulators that may want to hold their own reviews of the deal. Ontario and Quebec - which also has the power to block the merger - have already indicated they plan to do so.

Under the planned merger, Toronto would be headquarters for equity listings for the entire group and would be joint head office for the entire company along with London.

Montreal would be the hub for derivatives trading, Calgary for the energy group and Calgary and Vancouver would jointly share headquarters of the junior TSX Venture Exchange.

London will be joint head office of the overall company and be the base for the company's chief executive. It will also be a centre for international listing and for the group's technology solutions business and the centre for information services and post-trade services.

The LSE's subsidiary Borsa Italiana will have its headquarters in Milan, which will become the new centre for the group's global fixed income businesses, global equities trading and European post-trading services.

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