After nine months at the top of TMX Group Ltd., Lou Eccleston is making it clear he wants to end the current cold war with Bay Street.
Before the new chief executive set foot in Canada last November, many of TMX's top clients had grown frustrated with the company's dominant position. Controlling more than 70 per cent of Canadian trading volumes, TMX, which operates the S&P/TSX Composite Index, has a virtual monopoly on market data and has long dictated market dynamics, such as fostering an environment where high-frequency trading flourished.
Many people accused TMX of acting in a"take-it-or-leave-it" fashion with its customers, and the enmity grew so feverish that, for the second time in a decade, top financial institutions banded together this spring to form a rival exchange. Last week the head of Aequitas Innovations Ltd., the new competitor, publicly challenged Mr. Eccleston to lower TMX's "exorbitant" fees and to rethink the company's strategy.
Early in his job as TMX's new CEO, Mr. Eccleston stayed out of the public spotlight, but this month he emerged, armed with an aggressive game plan and a promise to repair relationships with angry clients.
"We heard it loud and clear," he said of Bay Street's frustration. "We need to be more in touch with the issues our clients are facing."
After meeting with hundreds of people across Canada, Mr. Eccleston said he appreciates why clients sometimes feel TMX acts in its self-interest. The goal now, he said, is to put users first: "It's not just about what TMX can do, it's about what TMX can do for the client."
That can sound like a vague promise, but the new CEO is actively recruiting a chief client officer, a new position he created, and his recent executive shuffle – which saw two TMX veterans depart – involved hiring Nick Thadaney to head the markets business. Mr. Thadaney joined from ITG Canada, a specialized trading firm that was a client of TMX.
Until now, Mr. Eccleston had not explained the hire. But in an interview, he said he has always been keen on "having a client perspective inside your business." He was also impressed with how Mr. Thadaney ran ITG, which is well regarded in Canada for its trading prowess. "People never had to do business with his company," Mr. Eccleston said, but because it was such a good shop, "they wanted to do business [with ITG]."
What went unsaid is how putting someone like Mr. Thadaney in a prominent role might shake up the way people think internally.
Mr. Eccleston is also determined to make TMX look more like a technology-driven company – which makes sense given his background at organizations such as S&P Capital IQ and Thomson Financial. "We need to be a digital enterprise," he said, which means TMX needs to "move fast" and "to start building applications for clients."
Historically, TMX charged clients to access its broad data feed, which details all the trades executed over its exchanges, but in many ways the feed was a data dump. Mr. Eccleston has plans to set up an insight lab that can package this information into unique data sets sold through a data store – much like apps are sold through an app store.
But as much as he wants to make TMX evolve, Mr. Eccleston made clear that he won't be bullied by rivals. Last Friday, Jos Schmitt, CEO of Aequitas, appeared on Business News Network and issued a number of public "challenges" to Mr. Eccleston, including calling on him to reduce market data and stock-listing fees.
"I actually find it flattering and a bit puzzling that [Schmitt] goes on TV and talks more about me than his own business," he said, shooting back.
To clients who share Mr. Schmitt's concern about costs, TMX's CEO said he has reviewed the company's data fees and found them to be comparable with those of other exchanges around the world. It's easy to look at a few individual prices and take them out of context, he said, "but when you actually look at the whole package together, you'll see that we're very consistent with international standards."
During TMX's quarterly conference call in early August, Mr. Eccleston delivered a sweeping strategy – which he likened lightheartedly to a "state of the union" address – that involves reorganizing TMX internally to reshape how the organization functions. Because there is so much to do, he's told investors, it will all take time, and he promises to deliver more specifics by the end of the year.
For now, one area where he can offer more detail is his plan for the Venture Exchange. Home to many junior resource companies, the Venture has struggled since the mining supercycle collapsed and energy markets went into freefall. One of Mr. Eccleston's goals is to make it an attractive exchange for burgeoning technology companies in Canada. "We need to reimagine and rethink" the Venture, he said.