London Stock Exchange CEO Xavier Rolet, left, and TMX Group CEO Tom Kloet speak to the media at the TMX Broadcast centre.Mark Blinch/Reuters
The Ontario government is setting up an all-party committee of the legislature to review a contentious, transatlantic deal between the Toronto and London stock exchanges.
The government will ask house leaders for all three political parties to set up the committee on Tuesday, when the legislature begins its spring session, said a senior government source.
The committee, to be headed by veteran Liberal MPP Gerry Phillips, will look at the impact of the proposed $7-billion-plus transaction on Toronto's financial-services sector as well as the mining industry in Northern Ontario, the source said.
Both sectors are at the centre of the McGuinty government's plan to return Canada's one-time economic engine to prosperity. The global economic recession left Ontario with a battered manufacturing heartland and a record deficit, which now stands at $18.7-billion.
The government's job-creation plan is focused on Canada's financial capital, which employs 300,000 and is home to the Toronto Stock Exchange. As well, the government hopes to exploit the untapped potential of the province's natural resources in the north. It is encouraging development in the Ring of Fire, a mining exploration area in the James Bay Lowlands in Northern Ontario that might contain the world's largest chromite deposits.
The McGuinty government is worried about the spectre of job losses in Toronto's financial sector just eight months before a provincial election.
Finance Minister Dwight Duncan has expressed misgivings about the country's premier stock exchange joining forces with the London Stock Exchange.
He has all-party support at the Ontario legislature, with both Progressive Conservative Leader Tim Hudak and New Democratic Leader Andrea Horwath questioning the impact the proposed deal might have on all the ancillary service-sector jobs, including those at accounting firms, restaurants and dry cleaners, that support the financial sector.
"At this point, my spidey sense is saying 'danger, danger,' as opposed to saying 'just a little conversation and I'll be fine about it,' " Ms. Horwath said in an interview last week.
She has called for public hearings and said her party has a role to play in trying to avoid having Toronto become "a branch plant of a stock exchange now, just like we are a branch plant of so many other things in Ontario."
In an interview on CBC television last week, Mr. Hudak also weighed in on the growing debate over the proposed transaction, which has the support of some of Canada's top business executives.
"Is it a merger of equals? Is it a takeover?" Mr. Hudak asked. "I think there are a lot of questions that need to be answered."
The McGuinty government has the power on its own to block the deal, but for now will defer to Ottawa, Mr. Duncan said in a recent interview. Federal Industry Minister Tony Clement has announced that Ottawa will review the deal to determine whether it holds a "net benefit" for Canada.
Mr. Duncan will ask the all-party committee in Ontario to prepare a submission for the federal government.
Executives of TMX Group, owner of the Toronto Stock Exchange, and the LSE have billed the proposed transaction as a "merger of equals," but Mr. Duncan has rejected that characterization, saying it is a takeover of the Canadian exchange. Shareholders of TMX would end up with a 45-per-cent stake in the combined entity and control would reside overseas, he said.
With a report from Adam Radwanski
Karen Howlett