AMF set to approve Maple bid for TMX

Additionally, Maple says that the Ontario Securities Commission has requested that its staff develop draft recognition orders that would impose detailed terms and conditions on the deal. The OSC will publish the draft orders for a 30-day public comment period prior to making a final decision on the recognition orders.

The AMF’s approval of the deal is somewhat less qualified. It indicates that it is satisfied that the conditions that it intends to impose on Maple and its subsidiaries will adequately address the issues raised previously by the AMF, primarily its concern that the derivatives business remain in Montréal. Those conditions will be incorporated into the decisions that the AMF expects to issue in the coming weeks.

It says that since the filing of Maple’s initial application on October 3, 2011, numerous discussions with Maple have helped address the concerns of the AMF and have enhanced the undertakings initially proposed that will be necessary for the AMF to issue a final decision to ensure derivatives trading and related software development remains in Montréal. And, it will set up a derivatives committee of the board to advise on all policy issues related to derivatives.

“We’re satisfied with the results of discussions to date with Maple and with the scope of the undertakings that Maple will be required to provide. In addition, the conditions that Maple will be required to accept will ensure that we are able to fully assume our role and responsibilities as a regulator, while giving it the power to operate efficiently,” stated AMF president and CEO, Mario Albert.

Albert added that, “We believe that this undertaking in principle to maintain and continue to develop Montréal as a hub of attraction for Maple’s derivatives trading and related products operations, including over-the-counter derivatives, is vital for a robust derivatives industry in Québec.”

The AMF also notes that it intends to give its approval so that Maple can acquire Alpha and CDS, subject to conditions intended to ensure access to CDS, and address issues with respect to the rate structure of CDS. The AMF says it will therefore require that Maple meet stringent conditions pertaining to corporate governance, barriers to access, fee structure and the fairness of this structure for market participants, in the event that Maple concludes the acquisition of CDS.

“While the transaction remains subject to OSC, AMF and other approvals, these developments move us closer to fulfilling our vision to create an integrated exchange and clearing group that can deliver significant benefits to Canada and participants in Canada’s capital markets,” said Luc Bertrand on behalf of Maple. In addition to the OSC and the AMF, the deal also requires approval from the Alberta Securities Commission, the B.C. Securities Commission and the Competition Bureau. “To this end, in addition to the discussions Maple and TMX Group will have with securities regulators regarding the draft recognition orders, they will continue their efforts to address the serious concerns previously raised by the Competition Bureau,” it notes. Given that the regulatory approvals have not yet been nailed down in time for the deal’s proposed closing on April 30, Maple and TMX Group are in discussions to extend that deadline under their support agreement, and Maple is also in discussions to extend related agreements among the 13 Maple investors, and with its lenders for the debt financing to be used to fund the acquisition.

Maple notes that, while it will work to settle the terms and conditions of the recognition orders and to resolve outstanding issues and concerns raised by the securities regulatory authorities and the Competition Bureau, there can be no assurance that the required regulatory approvals will be obtained and that the deal will go ahead.