The British Columbia Securities Commission is expressing concerns about a deal that would see the collection of banks, known as Maple Group, acquiring TMX Group, the company that controls the Toronto Stock Exchange and TSX Venture Exchange.
In June 2011, Maple offered to acquire all of the issued and outstanding shares of TMX group, a move that is expected to combine the Toronto Stock Exchange with rival Alpha Group with the Canadian Depository for Securities clearing house.
Maple is comprised of 13 large Canadian financial institutions, including CIBC (TSX:T.CM, Stock forum), National Bank (TSX:T.NA, Stock Forum), Scotiabank (TSX:T.BNS, Stock Forum) and TD Canada Trust
But the B.C. Securities Commission says it sees “risks associated with the proposed acquisitions.’’
For example, it says there is a risk that the Maple nominees could influence the board to direct TSX Venture management to make decisions that suit objectives of the Maple owners but are not necessarily optimal for the success of TSX Venture.”
The commission also says the acquisition “creates the opportunity for significant conflicts of interest, for anti-competitive behaviour, for inappropriate access to market information by Maple owners that is unavailable to competitors, and for increased systemic risk.”
In published reports, Maple Group said it remains optimistic that all outstanding issues will be resolved before the deadline at the end of the month.
Meanwhile, Commission describes five conditions that would be necessary to secure its approval.
1.Maple group must adopt a mission statement that pledges to maintain and grow a competitive Canadian public venture market and would include the allocation of sufficient finances to the TSX Venture to ensure this is done.
2.Maple must seek approval from the Commission if it wants to change any current TSX Venture rules or fees.
3.The conditions and undertakings would include a fee model, requirements to ensure independence from Maple in Canadian Depository for Securities Ltd.’s governance structure, strong marketplace committees, and ongoing regulatory oversight of any changes to fees, collateral requirements, and terms of access.
4.Maple must maintain TSX Venture’s existing operations in Vancouver
5.Maple must protect the confidentiality of information that shareholders access through their ownership.
The deal has already been approved by the federal Competition Bureau and the Ontario Securities Commission.