While the federal government is still deciding what it thinks about the proposed merger between Toronto’s TMX Group and the London Stock Exchange (LSE), Canadian CEOs have already made up their minds. A recent survey by Compas Inc. shows that executives overwhelmingly support the deal.
Eighteen percent of respondents said they support the merger without any qualifications, while an additional 63% were in favour so long as federal and provincial governments do their best to ensure that Canadian regulatory oversight is fully protected. Only 17% said the federal government or the governments of Ontario and Quebec should block the deal.
The CEOs believe the TMX-LSE merger has many potential benefits for Canada. When asked if the merger is a major opportunity for Canadian companies to become better known in the European marketplace, they agreed, giving the statement a 5.0 on a 7-point scale, where 7 means agree strongly and 1 means the opposite. They were also optimistic about the opportunity for Canada to become a bigger leader in the resources sector and to showcase its economy internationally. “The world’s economy continues to be globalized,” said one exec. “This is one more step on that path, and as long as it benefits Canada, it’s a good move.”
However, the CEOs did express some concerns about the deal. The biggest worry is the potential for confusion about the regulation of transactions on the exchange. One CEO said that having a national securities regulator in place would help make the situation easier. “Trying to create a global entity that is still regulated by provincial securities commissions will be tough,” the CEO said. “It demonstrates the urgent need for a national regulator before we have a global regulator.”
Executives also expressed concerns about job losses in Toronto’s financial sector, and feared that Canada’s sovereign regulation of equity markets was at risk. “Bigger does not appear to be better for the people, as they are losing control of their own markets,” said one executive.