The Past Speaks

The current issue of The Economist has a great article on the proposed merger of the Toronto and London Stock Exchanges.  It is part of series of pieces on the global trend towards the international mergers of exchanges.

Ever since plans for a “merger of equals” between the LSE and the TSX were announced, Canadians have been debating the implications of the loss of this strategic asset. Last week, four Canadian banks and five Canadian pension funds launched a rival bid for the exchange, playing the nationalism card. Their syndicate is known as Maple, which is, of course, the national tree of Canada.

I like how The Economist put the debate in Canada over the future of the TSX into its international context.

Financial protectionism has grown since the credit crisis as governments re-regulate financial firms and markets. But the level of nationalism varies. In the merger-obsessed world of exchanges, America and Britain still broadly welcome foreign bidders. In smaller markets, where officials fret about business migrating to bigger financial centres, there is more flag-waving. Canada’s provincial politicians have applauded Maple’s bid. In a recent poll, most Canadians agreed that TMX was a “strategic” asset. This mirrors the mood in Australia, whose government blocked the proposed merger between ASX and Singapore’s exchange in April.

I think that the comparison with Australia is an apt one, since Australia’s economy has some striking similarities to that of Canada.

UPDATE: the Maple group’s bid was rejected by the owners of the TSX an inadequate. See here.