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Illustration of Tom Kloet, chief executive officer, TMX Group Inc. (Anthony Jenkins/The Globe and Mail)
Illustration of Tom Kloet, chief executive officer, TMX Group Inc. (Anthony Jenkins/The Globe and Mail)

THE LUNCH

TMX’s Tom Kloet: On Bay Street, but not of it Add to ...

Tom Kloet is an outsider at the centre of Canadian finance.

The executive, who spent much of his career in Chicago, was almost unknown in this country when he was tapped almost five years ago to head what is arguably Canada’s most vital piece of financial infrastructure, Toronto Stock Exchange owner TMX Group Inc. When the company decided to look beyond the country’s borders for a leader, it was a shocker for an institution that had always seen itself as Canadian through and through.

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What the company got was an American with an international résumé featuring a background more focused on the growing enterprise of derivatives than the fading business of stocks. He had no ties to Canada’s banks, unlike previous TMX bosses.

While Mr. Kloet’s Midwestern persona comes off low-key relative to many high-strung finance types, that belies his willingness to think big.

Two years ago today, Mr. Kloet sat in the TMX’s broadcast centre, under the colourful board of stock tickers, and announced a transatlantic merger with London Stock Exchange Group PLC. It didn’t fly. The move led a group of Canadian financial institutions calling themselves Maple Group to mount a counterbid, and eventually to take over TMX in a friendly transaction.

Nonetheless, the LSE deal was the most daring ever proposed by the TMX, and the resulting Maple takeover has the potential to reshape the way investors do business on Canadian markets.

Since coming north, he has become a big booster of Toronto, and Canada, as a place to live and work. He’s a huge proponent of Canada’s future as a growing financial centre. He’s even a Blue Jays fan, drawing a lesson from the baseball club’s big rebuild.

“They saw they could be opportunistic when others could not, and they went about it. That’s a good business strategy.”

He may have adopted Toronto’s team, but he has not totally gone native.

For lunch, he has chosen Blowfish, a block from the white tower that houses the TMX executive offices and the computers that now handle all the trading. It is a sushi hotspot where the clientele hails mostly from Bay Street, which the restaurant overlooks.

Toronto’s financial core tends to have a homogenizing effect – or maybe it’s just that the traders, bankers and lawyers who show up to work in financial markets share certain traits, from manner to dress. Suits are understated but expensive, many with a sleeve button pointedly left unbuttoned as a signal that the clothing is custom made. Watches are big, hairstyles are fussed over, ties a fashionable width, and complexions buffed.

As Mr. Kloet folds his rangy frame into the low chair, it’s clear he has not yet succumbed. He looks less like one of the country’s most important financial executives than Hollywood’s idea of a city councillor from a Midwestern burgh like Peoria, Ill. – which happens to be one of the towns where he grew up. His moustache is not one of those one-month wonders that sprout for November’s Movember charity drive, but a year-round fixture. His voice still reflects his roots, with vowels that are prairie-wide.

Mr. Kloet is immensely likeable. He possesses an endearing wonkishness and love of what he calls the “plumbing of markets.” He exudes a genuine excitement about the minutiae of running an exchange (and there are few businesses with more minutiae). He also exhibits a welcome frankness in financial circles, where executives are heavily coached and always cognizant that potential clients might be listening, and so are careful to avoid saying anything publicly that might be construed as offensive to a meal ticket.

Such as this sort of thing:

“If I had a wish, it would be that I would see more mid- to large-broker dealers who are not associated with banks,” he says. Those would be the banks that are his biggest customers, and which, since last year’s Maple deal, are some of TMX’s biggest shareholders.

Mr. Kloet, as bullish as he is on Toronto’s financial sector, is mystified as to why there are not more big independent brokers in Canada – firms like Charles Schwab. What happened to all the traders when physical trading floors closed? In Chicago, those traders started their own firms and built the town into a global centre for futures and options markets.

In Toronto, he keeps asking people why the traders didn’t do something similar. “Did they vaporize?” he wonders. Canada, he concludes, is just a “different environment.”

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