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Gary Wright

Gary Wright - BISS Research

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LSE and TMX agree merger; highlight technology potential

09 February 2011  |  8312 views  |  0
The London Stock Exchange (LSE) has agreed an all share "merger of equals" with Canada's TMX Group, creating a global superpower that will have a strong technology emphasis.

London Stock Exchange shows its teeth

09 February 2011  |  3968 views  |  3

The news that the LSE has agreed a merger with Canada's TMX Group which operates the Toronto and Montreal Stock Exchanges is a great move for both.

It is a very imaginative deal that offers both a strong footing in Europe and the North American continent, enabling potential business growth and an exciting new opportunity for investors.

With the largest mining exchange in the world now opened to European investors the opportunity is open for new portfolios to be created and  generate a fresh impetus to a securities market becoming stale with interest.

The LSE has been making good noises lately with some very interesting developments in technology and a resolve to create a post trade service which exactly meets the demands of its users. Now the LSE is moving forward with corporate developments that are setting it apart from other Stock Exchanges.

Expect more corporate moves as finally the LSE has found its teeth! 

TagsDealing roomsTrade execution

Comments: (6)

A Finextra member | 09 February, 2011, 11:05

Some interesting detail in this deal- LSEG shareholders end up with 55% of the combined group making them the dominant partner. Can an organisation be headquartered in two places namely London and Toronto? Don't wish to be pedantic but surely you can only have one headquarters? Again, suspect London will be dominant. Combined group will have very strong position in cash equities but I suspect critics will (in my view unfairly) cite lack of progress in derivatives. "Merger" will also be positive for combined group's post-trade and fixed income offerings. With so many new listings coming from mining/natural resources companies the combined group will be better positioned to compete with HK/Shanghai which have done well in the area recently.

A Finextra member | 09 February, 2011, 11:24

Thanks David

Good stuff and i would not worry about the two head quarter thing as its is more an appeasing statement than operational fact. I take this move as a statement of intent by the LSE and i would not be suprised if further moves are in the future. This combined group has some serious clout now and has a fantastic balance sheet to fund more purchases. As you say the potential growth in an attractive sector makes this deal very rewarding for all concerned 

Kiri Self - TRG Post Trade Services - London | 10 February, 2011, 11:49

I think this is excellent news for the LSE, but do wonder about their new-look executive team - it seems light on members from Xavier's current ExCo.

One would also think that this is the merger of the two less likely to be impeded by the competition authorities. 

A Finextra member | 10 February, 2011, 11:57

Thanks Kiri

Yes it might look a light coverage but sure the new team represents the best possible selection. Time will tell. Its such a good deal that its very unlikely to get competition authorities worried.

I also like the way the LSE has now moved quietly into derivertives. I am convinced that this deal opens up many more avenues for future growth  

Kiri Self - TRG Post Trade Services - London | 10 February, 2011, 12:03

I am sure they will do a great job.

I do also agree with you re the derivatives - in many ways it is a good match because as Xavier said in one of his interviews, there isn't too much crossover between the two groups.

A Finextra member | 10 February, 2011, 12:11

Yes and i believe this is a key feature of the deal. It will be very interesting to see if the merger increases the flow from Canada to Europe as much as i think it will the reverse way

The LSE has a huge technology focus right now that i am sure will benefit this deal and others i think could be in the pipeline. The NYSE Euronext deal with the Germans however looks fraught with technology problems and culture issues

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