LSE looks like facing competition for TMX from bank-backed Alpha ATS

LSE looks like facing competition for TMX from bank-backed Alpha ATS

With Canadian banks looking for ways to block TMX Group's merger with the London Stock Exchange (LSE), traders have begun betting on the proposal being trumped, according to Bloomberg.

Opposition to the tie-up has been mounting in Canada with three of the country's six top banks - Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and National Bank of Canada - penning a letter in March outlining their concern that the deal would hurt Toronto's ambitions to become a global financial services hub.

Last week the Globe and Mail newspaper reported that the three are considering ways to block the deal, including a counter-bid for the C$3 billion-valued TMX Group, and have approached several pension funds about participating. An option under consideration is the use of trading platform Alpha Group - which the banks and the Canada Pension Plan Investment Board have stakes in - for a bid.

The speculation saw TMX Group's share price rise above the LSE's February all-stock offer for the first time on Friday, according to Bloomberg data, as arbitragers bet on a rival bid emerging.

If the banks succeed in thwarting the LSE's plans, it will prove a serious setback for the London bourse's ambitions during a period of consolidation that is also seeing Deutsche Boerse battle it out with Nasdaq OMX and IntercontinentalExchange (ICE) for control of Nyse Euronext.

With Nyse Euronext shareholders able to vote on the Deutsche Boerse proposal from today, Nasdaq OMX and ICE have kept up the pressure by sending out a letter claiming that their offer is superior and accusing Nyse Euronext's management of rushing through the vote before it is known whether regulatory approval will be granted.

"You, the stockholders to whom this statement refers, have the right to be asking why, in spite of the clear superiority of the proposal that Nasdaq OMX and ICE have made to acquire Nyse Euronext, Jan-Michiel Hessels and your Board are stonewalling us by refusing to even meet, and are instead trying to force through an uncertain transaction that is worth $1 billion less to Nyse stockholders," says the letter.

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