Like most Canadian companies, TMX Group Inc. looks inside and outside the country for talent. The stock exchange operator’s past two chief executives were Americans.
TMX, owner of the Toronto and Montreal exchanges, is now looking for a new boss after 61-year-old CEO Lou Eccleston took early retirement last month. And there’s every indication the board of this flagship company is going out of its way to scout for candidates who call Canada their home and native land.
If someone who grew up on double-doubles does win the top job at the TMX, it would reverse a recent trend that’s seen foreign-born executives named CEO at trendsetting domestic financial players, including the Ontario Teachers’ Pension Plan, the OPTrust pension fund manager and Canada Pension Plan Investment Board [CCPIB].
Developing home-grown talent would also be consistent with the history of the TMX. Recall that a consortium of the country’s banks and fund managers that called themselves the Maple Group went to considerable trouble to keep the company in domestic hands in the face of a 2011 takeover bid from the London Stock Exchange.
In the past, TMX looked to Alan Guarino, vice-chairman at New York-based executive search firm Korn Ferry, for assistance in finding its CEO. The firm brought in Mr. Eccleston, who kept a home in New Jersey during his six years at the helm of Toronto-based TMX, as well as predecessor Thomas Kloet, who ran the Singapore stock exchange prior to moving to Toronto in 2008.
For the current CEO search, TMX chair Charles Winograd, a proud native of Winnipeg, hired both Korn Ferry and Toronto-based Rosin Executive Search, a boutique firm founded in 2014 by former investment banking executive Jeff Rosin. While the TMX, Korn Ferry and Rosin declined to comment on the mandate, sources who already have been interviewed for the TMX job say the idea is to scour the landscape in Canada by having Rosin focus on domestic candidates, and Korn Ferry working on both international executives and Canadians who are currently residing outside the country.
One name that keeps coming up is former TD Ameritrade Holding Corp. president and chief executive Tim Hockey, who recently left the U.S. discount brokerage and is proudly from the Great White North. According to the jungle drums, the TMX board is interested in Mr. Hockey, who ran Toronto-Dominion Bank’s retail operation prior to moving to the United States in 2016, but it’s not clear if he wants this job.
Canadian boards reach for foreign-born CEOs on the assumption, rightly or wrongly, that a domestic company with global aspirations needs a leader with experience in international markets. That’s part of the logic behind recent promotions at Ontario Teachers, HOOPP and CPPIB. Mr. Hockey checks that box, as he spent the past four years building a technology-based trading business in the world’s most competitive environment.
Other possible Canadian-born external candidates for the TMX job include Etienne Phaneuf, former CEO of e-trading platform ITG Canada, and CIBC Capital Markets executive Christian Exshaw, who is currently on the TMX board of directors. There are also said to be at least three internal candidates for CEO: Montreal Exchange head Luc Fortin, who was named global head of trading for TMX in 2018; TMX’s chief financial officer John McKenzie, who was named interim CEO last month; and Jay Rajarathinam, TMX’s chief technology officer.
Whoever wins this job takes over a company that’s firing on all cylinders. The TMX’s stock price has risen 55 per cent over the past 12 months, and shares in rival exchanges have also been on a tear. The past four CEOs did the tough job of integrating Canadian regional exchanges and related businesses, such as securities clearing houses.
“With TMX having already pivoted into execution mode, and with a deep roster of management expertise, we do not view the leadership transition as a material impediment to sustaining operational momentum," analyst Phil Hardie at Bank of Nova Scotia said in a recent report. He added: "Nor do we expect it to derail any potential M&A opportunities that would further accelerate its existing strategy.”