Toronto Wields Financial Clout

Terry Flanagan

TSX takeover triggers strong sentiments among financial community.

The failed acquisition of the Toronto Stock Exchange by the London Stock Exchange underscores a sentiment that Toronto is emerging as a world financial center in its own right.

The future of Toronto’s TMX Group, operators of the Toronto Stock Exchange and the TSX-Venture Exchange, is up in the air as its proposed merger with the London Stock Exchange Group has foundered.

“Much of the debate around the proposed TMX-LSE merger was centered around the fact that Toronto is a growing hub, and would this merger facilitate that growth?” Janet Ecker, president of the Toronto Financial Services Alliance, told Markets Media.

A competing proposal to acquire TMX had been advanced by Maple Group Acquisition Corp., a consortium led by some of Canada’s largest banks and pension and investment funds.

“Most agree that an important goal is to preserve Toronto’s leadership position in mining
and metals financing and listings,” said Ecker.

The fact that Canada weathered the financial crisis relatively unscathed is testament to the soundness of the credit policies of leading financial institutions in the region.

“What was considered a weakness is now considered a strength, which is a conservative approach to risk management,” Ecker said. “Minister Flaherty [Federal Finance Minister Jim Flaherty] says ‘stodgy is the new sexy.’”

While the capital markets landscape in Canada is reshaped by regulatory reform, the shape of those reforms is characterized by a willingness of industry and regulators to seek common ground.

“As we seek to improve regulations, it’s important that we don’t end up undermining the strength  of the financial sector as an economic driver,” Ecker said.  “The strength of Canada lie in  the relationships between policymakers, regulators and the financial sector; there’s a spirit of working together to find resolutions, which we’re not seeing in other jurisdictions.”

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