Ontario Businesses to Weigh-in on TMX-LSE Merger

Since the proposed merger between the TMX Group and the London Stock Exchange Group (LSE) was announced last month, pressure has been mounting on all fronts. An array of differing views is showcased daily, with the latest being the announcement that four of Canada’s six leading financial institutions are opposing the deal, claiming it “would result in the loss of a viable global entity and perhaps thousands of well-paying jobs.” The banks’ influence weighs heavily, given that they drive more than 60% of the trading taking place on the TSX.

According to a recent study by Compas Inc., the business community is by and large supportive of the merger, which it sees as a major opportunity for Canadian companies to gain access to more capital and remain major players in a global financial services hub. Supporters of the transaction, which include Gord Nixon, CEO, Royal Bank of Canada, have expressed their concern over the potential risks linked to missing out on an opportunity of this scale. Mr. Nixon stated that “if Toronto is going to grow as a global financial centre, the benefits of a global exchange co-headquartered in Toronto likely outweigh the implications of a local exchange that will become increasingly less relevant over time as trading and exchanges globalize.” We can expect his opinion to be endorsed by a majority of business leaders, especially if the proposed US$10.2 billion takeover of NYSE Euronext by Deutsche Boerse is finalized in the coming months.

Those opposing the deal have made arguments based on pressing concerns about the impact on sovereignty, employment, clout as a financial centre, and loss of regulatory control over our own financial system.  Both Ontario finance minister Dwight Duncan and former federal industry minister Jim Prentice are calling for a formal review of the regulatory implications. After all, it was Canada’s strong regulatory regime that was credited in being a significant advantage in weathering the global financial crisis.  Moreover, Canada has recently exercised caution in dealing with foreign takeover issues. Last November’s quashing of the PotashCorp takeover by BHP Billiton can be considered one of the more controversial decisions the government has had to face.  The TMX-LSE merger, while not focused on control of natural resources, takes this debate to a new level.  We’re talking about a fundamental piece of our free market economy.  As international markets become increasingly intertwined, we should expect this trend to continue.

It is not surprising that the TSX matter has now moved from the business arena to the political one. In order to resolve this issue and achieve the best outcome for all, and most importantly for our businesses, an open and fair dialogue involving key players of our economy is critical.

Recognizing the urgency for such a dialogue to take place, the Ontario Chamber of Commerce will feature Thomas Kloet, CEO of the TMX Group at a special meeting of the Ontario Business Advisory Council (OBAC) on Thursday March 24^th, 2011.  The meeting will provide leaders from our business community with a timely opportunity to share their concerns, obtain clear answers relating to the deal and offer input. For more information about this OBAC session, please visit: http://occ.on.ca/events/obac/.

Image source: Shutterstock_1354404

The keynote speech, delivered by David Rosenberg, Chief Economist and Strategist for Gluskin Sheff + Associates Inc. was witty and informative. Rosenberg managed to entertain the crowd with self-directed humour and humbleness while addressing the serious economic challenges facing both Canada and the United States.

Highlights from the session included:

• Rosenberg sharing with the crowd Bob Farrell’s “10 Market Rules to Remember.” Farrell, the former Chief Stock Market  analyst for Merrill Lynch and Company was credited by Rosenberg as a great influence in his success and knowledge in the industry.
• Rosenberg joked that Canadians cannot seem to agree on two aspects; the Canadian dollar or hockey teams. Just as Canadians disagree avidly on the best Canadian hockey team, we cannot, as Rosenberg pointed out, seem to make up our minds as to when the Canadian dollar is at its most satisfactory level. Canadians either see the dollar as too high or too low, making it difficult to find common ground
• Canada, despite facing its own economic challenges, is in a better position than the United States. Investors are more interested in investing in our country as Rosenberg stated the Canadian dollar is expected to continue appreciating which is only beneficial as profits can be gained.

Rosenberg concluded that Canada is in a better economic position than the United States as global investors see Canada as a safe and stable place to invest.

Written by: Elizabeth Morris and Milica Petkovic

Rudy van Zijp, General Secretary of Actal, a Dutch Advisory Board of Administrative Burden, opened Tuesday’s Smart Regulation presentation with a bold statement: “We all suffer from heavy regulation.” Van Zijp continued by sharing with delegates the European Union Action Program Timeline. His expertise surrounding regulation issues provided an excellent introduction to the panel discussion.

The Smarter Regulation panel discussion centered on “Smart” and “Dumb” regulations and the importance of determining what does and does not work. Also discussed was the necessity for the business community to get involved with all levels of government to ensure a better regulatory process. The Honourable John Wilkinson, Minister of the Environment, made the connection between innovation and regulation, and suggested that “we need to think about how to make regulation smarter, how to innovate.”

Ray Tanguay, Chairman of Toyota Motor Manufacturing Canada Inc., concluded the afternoon session by highlighting some of the key themes that had emerged out of the day and also recognized the significance of communication when he discussed the importance of building relationships between academia, government and business.

The morning panel discussion looked at the long term needs of securing a creative and talented workforce. Kirk Dudtschak, Senior Vice- President of RBC Royal Bank boldly stated “War for talent is here now because we are all searching for the best and brightest to help drive our business”. A collaborative effort of labour, academia, business and government is necessary for a sustainable economy.

IBM Canada utilizes this age of graduates, taking on many interns and hiring new talent. Patrick Horgan, Vice-President of IBM Canada stated that, “The 21st century workforce is about changing the game.” Inevitably, in hiring educated and skilled individuals, this can create “smarter cities and a world-class economy.”

One major challenge of creating a world-class economy, recognized by Horgan, is obtaining critical skills. This involves reversing the trend in the low number of new graduates in core disciplines (science and engineering).  The struggle with family incomes and the incapability to send students to post-secondary institutes is recognized by Patrick (Sid) Ryan, President of the Ontario Federation of Labour. He noted that there should be a “heavy investment in post-secondary education by lowering tuition fees, which allows access to all students in all income levels.”

Institutions realize that it is important to uphold a strong brand image to attract new talent, however strong emphasis was put on the importance of maintaining relationships. Businesses must develop partnerships with post-secondary institutions in order to guarantee the top performers.

Written by: Katie Laviolette and Stephanie Porter