TMX CEO plays down Nasdaq threat in Canada

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Investors are spooked, but Lou Eccleston is not scared.

Since the news broke that Nasdaq Inc., the U.S.-based stock exchange company, is setting up shop in Canada, TMX Group Ltd.'s shares have plummeted 18 per cent, suggesting investors are terrified by the new competitive landscape.

The broad assumption has been that it will be a cakewalk for the bigger, global firm because companies that now trade on the long-dominant TMX will change over.

That line of reasoning perplexes TMX's chief executive officer. "Just being a big name in the U.S. doesn't mean automatically they've got advantages in Canada," he said of Nasdaq while speaking to reporters on Thursday.

"Nobody is just going to walk in and hang a shingle and take business."

When asked what advantage TMX has over Nasdaq that will help it to protect its home turf, Mr. Eccleston turned the question on its head.

"You tell me what advantage they have on us in Canada," he asked.

His thinking: TMX has the largest liquidity pool, which in turn offers up the best data for users. And, of course, TMX is the incumbent.

Mr. Eccleston was not being flippant. "I'm not demeaning competition. We take it very seriously – very seriously," he said. "I'm not in any way saying they don't have ample capabilities and experience," he added, "but they're going to have to win business."

He also swore he has been expecting a threat like this. "This is what we've been preparing for," Mr. Eccleston explained.

"I've been telling everybody: Something's coming."

That is partly why he worked to pivot the company during his first year on the job, with the goal of making TMX more like a technology company with superior data, rather than an infrastructure company. He also brought in new talent to refresh the roster, hiring a new head of Canadian equities from a rival, for one.

While he was somewhat balanced with his Nasdaq comments, Mr. Eccleston held little back when asked about the recent Competition Bureau complaint filed by competitor Aequitas Innovations Inc., which accuses TMX of being anti-competitive.

"We clearly believe that the complaint is utterly without merit," Mr. Eccleston said. "Their comments are absolutely full of misrepresentations and false allegations, and [are] meant to be sensational."

He even went so far as to take a friendly dig at the reporters sitting in front of him. "We'd love for you guys to ask more questions," he said, "versus just writing what they say."