Wednesday, 16 March 2011

LSE-TSX Merger - FAIR Makes a Sensible Suggestion to Help Investors

Amongst all the confused and confusing commentary, it is a relief to read a sensible suggestion by FAIR Canada that the merger of the LSE and the TSX be taken as an opportunity to change the regulatory side of the TSX market's operation, a move that would help protect investors a bit better.

FAIR Canada says the TSX's responsibility to set and to police the listings requirements should be moved to an arms-length body (like IIROC) away from where it is now, within the TSX itself in the same group that goes out soliciting listings by companies. That would avoid the obvious conflict of interest and danger that the pursuit of listings and the associated revenue for the TSX might be done at the cost of too-loose control of listing conditions.

The second aspect of listing rules is that the merged LSE-TSX would have to decide how to deal with listing rules - e.g. whether to keep them separate or come up with a single aligned set. Making a single set of stronger/better rules would be a welcome development. The Globe and Mail's In a TMX/LSE merger, whose rules apply? by Dave Milstead explains some examples of differing LSE vs TSX rules.

Looking on the positive side, instead of the prevalent negative blather that seems to predominate these days, the merger is a good opportunity to fix existing TSX deficiencies in a way that helps investors in Canada.

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