London: Canadians have received countless assurances that the deal to conjoin the TSX with the London Stock Exchange in a 45-55 deal will bestow only positive results on Toronto and the Canadian financial sector. "This is great news," declared Xavier Rolet, the London Stock Exchange Group CEO, "Great news for Canada and all its provinces."
Fierce believers in free enterprise always claim that letting the market have its way can only be good -- it's right up there with the immaculate conception in the pantheon of religious truths.
I'm in this city for a while -- a city that has lived off the labour of others for centuries, conjuring profits out of finance and insurance. The wealthy in London have bounced back beautifully from the crash. Bankers are flush with bonuses. Those who perform daily chores for the privileged commute in and out of this city because they can't afford to live here.
The U.K. government, made up of Thatcherites in a hurry, is slashing public sector jobs and throwing people off welfare -- David Cameron thinks it would be better if welfare recipients had jobs -- but there aren't any.
Prince Harry and other young royals are hanging out in Chelsea clubs that charge a thousand pounds for a plate of caviar and beans, washed down with a strip show. The Cameron government believes the Royal Wedding will revive the ailing British economy. Royal blood admits its carriers to a system of welfare much approved by public school boys such as Cameron.
Bay Street has also made a long career out of sweating profits out of Canadians. That's why few people outside Ontario care much about the prospect of the TSX being acquired by the high hats of the City.
Here's my modest proposal: if market takeovers are benign and only the foolish worry about the effects of someone else calling the shots in your economy, then why not reverse the proposed stock exchanges deal? Let the TSX ante up for 55 per cent of the new entity and the LSE for 45 per cent. Does control really matter? Surely the Brits would not get fussed over the idea of control of their leading exchange resting across the sea in a former colony. Or would they, and if so, why?
I agree that a reverse takeover would be better, but it is up to shareholders to reject the LSE bid and tender an offer for the LSE instead. A bid for the LSE would never happen, of course, because the soveriegn state fund that controls the major stake in the LSE is essentially controlled by a single person.
That brings me to the real point, which is the concentration of ownership of the combined entity will rest in Dubai. I think we can all agree now that Dubai does not have Canadian interests in mind and probably will not for some time to come. There are certainly positive benefits for a combined merger, not the least of which will be easier access for Canadian commodity and mining companies to receive European and therefore Asian exposure to raise capital. There are other benefits, such as longer trading hours, and listings in different currencies. Also, for the TMX, it gives some credibility to face the looming threat of Alpha Trading becoming a listing exchange.
In order for the merger to be acceptable, majority ownership must remain in Canada, and ownership concentration greater than a typical 5 or 10% should be prohibited. Specifically, the ability for one foreign royal to decide what "fair dealing" means when assessing listing requirements is deplorable. What's worse is that it is difficult to believe that insider information will not be misused, regardless of who owns it. The problem of insider information is really one of concentration of ownership.
Oh Please, wake up and look at your twenty dollar bill/note. Who do you see?
Our Queen does not own the TMX. That is the point. I would be rather upset if she did.