The Toronto Stock Exchange (TSX) announced in August it would not renew its non-compete agreement with the Montreal Exchange (MX), which expires June 2009, and instead will work with International Securities Exchange (ISE) to create a joint derivatives exchange in Canada that will compete with MX.
TSX also announced that in June 2009 it will take over the license now held by the MX from Standard and Poor’s to use the S&P/TSX 60 Index as the basis for futures and options contracts.
Luc Bertrand, president and CEO and the Montreal Exchange (MX), speaking at the Canadian Annual Derivatives Conference in Montreal Monday, said he had no forewarning about this and the MX had been in talks with S&P to renew the license before the agreement with the TSX was abruptly announced. He said he first heard of this news in a voice mail from a TSX representative minutes before the TSX announced the news publicly in August.
Given those developments, it is understandable that the two Canadian exchanges are not on the best of terms, yet that same night at the conference Canadian Finance Minister Jim Flaherty delivered a speech to the attendees where he said he wants TSX and MX to continue talks on a possible merger.
“I encourage them to pursue those negotiations,” he said, adding he’s not endorsing a merger, but merely pointing out it would be in the best interest of Canada.
In the meantime, TSX is moving ahead with plans to roll out its own derivatives market when the non-compete agreement with MX ends, and the MX is analyzing and studying the situation to see what it can do about it.
I know business is business, but this was rough.
By Yesenia salcedo
