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TMX Broadcast Centre (Frank Gunn/THE CANADIAN PRESS)
TMX Broadcast Centre (Frank Gunn/THE CANADIAN PRESS)

Survey

Financial analysts 'concerned' about bid for TMX Add to ...

More than a fifth of Canada’s financial analysts say they are “concerned” about the Maple Group Acquisition Corp.’s takeover bid for TMX Group, according to a survey conducted by the CFA Institute in collaboration with The Globe and Mail.

While 46 per cent of the CFA Institute members surveyed said that a takeover of TMX, the group that runs the Toronto and Montreal stock exchanges, would be good for Canadian capital markets, 21 per cent were “concerned” about the Maple Group bid.

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“Some of the concerns really revolve around the conflicts of interest that they think the buyers will have relative to the market,” said Jim Allen, head of capital markets policy at the CFA Institute.

“The same institutions that are running the banking side of the financial markets in Canada now all of a sudden have a very important role in the capital markets side as well.”

The CFA Institute is the global association of investment professionals that awards the prestigious Chartered Financial Analyst designation. Its nearly 13,000 members in Canada and more than 106,000 members worldwide have prominent roles in the financial markets.

Both investors and companies are worried that a takeover of Canada’s exchanges by Maple Group, which is composed of several of this country’s largest banks and pension funds, would give the consortium a “monopolistic position,” Mr. Allen said.

“[CFA Institute members]are concerned about the increase in costs that they are going to face and how that’s going to get passed on to their clients.”

Thirty-seven per cent of CFA Institute members indicated that any takeover of Canada’s premier exchange, by Maple Group or another party, would not be a good thing.

“Frankly, that’s a reasonable sentiment given the performance of the Canadian marketplace relative to the markets elsewhere in the world, including just south of the border,” Mr. Allen said. “The Canadian market has performed extremely well. There may be some concerns about some of the excesses that might be going on in other markets elsewhere.”

To make a takeover appealing to the large portion of dissenting analysts, Mr. Allen said there would need to be a consortium of Canadian owners not affiliated with banks and with enough capital that their bid wouldn’t increase TMX’s debt load.

“I’m sure there are potential sources of capital out there that might fit the bill, but whether they’re interested or they’re able to step up at this point in time is another matter altogether,” he said.

However, the majority of CFA Institute members said that a takeover would be positive because it would consolidate Canada’s securities clearinghouses and make trades cheaper. “It is one of those few areas where economies of scale present themselves and they actually come through,” he said.

The survey was conducted between July 28 and Aug. 3. The response rate was 7 per cent with 856 Canadian members answering the questionnaire. The margin of error was plus or minus 3.2 per cent.

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