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The TMX Broadcast Centre in downtown Toronto.

FERNANDO MORALES/THE GLOBE AND MAIL

That didn't take long. Just two years after a consortium of Canada's largest financial institutions bought TMX Group Ltd., which operates the Toronto Stock Exchange, there is a proposal to introduce new fees and raise others on a relatively obscure, but incredibly crucial, part of the country's capital markets.

When Maple Group Acquisition Corp. bought TMX for $3.8-billion in 2012, the acquirers wrapped Alpha Group and trade clearing institution CDS Ltd. into the deal. The latter group was relatively unheard of, but it operates a crucial piece of financial machinery, known as "clearing." Behind the scenes, it does everything from tracking which investors own which securities, to ensuring that money from selling shares or dividend payments gets into the right hands.

Before the acquisition, CDS operated under a "cost-recovery" model. In many ways the business was viewed as a public utility, because everyone on Bay Street depends on it, so profits weren't allowed. The big fear during the Maple deal was that the acquirers would buy CDS and then jack up its fees to help pay back the debt they tacked on during the purchase.

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To prevent any bad behaviour, regulators ultimately instituted tough rules that make it hard for TMX to make any fee changes to CDS. But that hasn't stopped them from trying.

TMX swears its proposal, which is now open for public comment, isn't a money grab. Instead of reworking its entire business, CDS is only looking to raise or introduce fees for certain activities. Corporate actions, such as managing dividend payments, are of particular importance. TMX argues that this business doesn't pay for itself, which means it has no money to reinvest and upgrade its outdated systems.

To make its proposal palatable, TMX wants to impose what it says are minor fees for these types of actions. Handling dividend payments, for instance, could cost a company $100 in total.

CDS head Jean Desgagne also argues that similar fees from rival exchanges, such as Singapore's SGX, are even higher. To keep its systems on par with these global peers, he says TMX needs to raise some cash for reinvestment.

In some ways, the situation is similar to the one that Interac Association faced for the past few years. Historically, Interac was required to run under a cost recovery model, but the company finally won federal approval this year to start making money in one of its business lines, in order to create profits that could be reinvested in things like technology.

However, TMX's timing will raise some eyebrows. Just last week a rival company won regulatory approval to launch a new Canadian stock exchange, and TMX is also worried about losing trading revenues to U.S. markets for Canadian companies that are interlisted.

Mr. Desgagne also acknowledged that some extra profits have been priced into its proposal. "I'd be lying if I said there wasn't a small profit margin," he said in an interview.

But regulators have the final say, meaning TMX must win approval from Ontario, British Columbia and Quebec before it makes any fee changes to CDS. With such a high hurdle to clear, anything that's too aggressive should have little chance of surviving.

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