TMX buys 16% stake in BSX
The president of the Bermuda Stock Exchange sounded the opening siren at the Toronto Stock Exchange yesterday morning in celebration of BSX’s largest foreign investment to date.The owner and operator of Canada’s Toronto Stock Exchange, TMX Group, has become one of the largest shareholders in the BSX with the purchase of a 16 percent stake. TMX’s CEO, Tom Kloet, will be joining the BSX board of directors.The Toronto Stock Exchange is the seventh largest in the world and TMX Group’s investment in BSX is its second overseas transaction, the first being in Australia last month.The news was widely reported with Greg Wojciechowski, president and CEO of the BSX and Mr Kloet speaking to international media on the venture.In an interview with The Royal Gazette, Mr Wojciechowski said: “This is one of the larger milestones for the BSX. This underscores the value that’s seen in the Bermuda market. They have a whole new level of experience that the BSX can leverage.“The board of BSX is looking at how the Exchange is going to develop going forward,” he added. “This is a culmination of strategic decisions that are yielding real commercial transactions.”Mr Wojciechowski elaborated in an interview with Financial Times: “There are niche opportunities for the capital market space and we have continued to develop our platform in Bermuda to be ready to support niche markets,” citing the listing of insurance-linked securities as one example.“We think the BSX is the important stock exchange in that region,” added Mr Kloet to Financial Times. “One of the key things is their [BSX’s] positioning with equities and their offshore presence. We have infrastructure that they can’t necessarily afford.“We will run into people in our London office who are looking for an offshore listing location and now we are going to be promoting that. I think it will help the BSX.”Created in 1971, the BSX states it has grown to become the world’s largest offshore, fully electronic securities exchange.The news comes on the heels of increased financial activity between Bermuda and Canada, including the signing of a Tax Information Exchange Agreement (TIEA) in July and Bermuda gaining recognition as a Designated Stock Exchange under Canada’s Income Tax Act, which went into effect in late October. The BSX has been recognised by leading stock markets, including The London Stock Exchange, US SEC and the World Federation of Exchanges, among others.The significance of the designation for the BSX is that it opens the door for Canadians to invest some of their tax-deferred retirement plans and other investments in BSX-listed securities, which could translate into greater liquidity of BSX-listed stocks.In 2005, the Canadian Government removed the foreign content limit on tax-deferred retirement plans prompting an increasing number of Canadian investors to look to foreign securities listed on foreign exchanges to enhance their returns and diversify the investments held in their Canadian Registered Retirement Savings Plans (RRSPs) and Deferred Profit Sharing Plans (DPSPs).TMX Group operates offices across Canada (Montreal, Calgary and Vancouver), in key US markets (Houston, Boston and Chicago) as well as in London and Beijing. It is the target of a $3.66 billion bid by a group of Canada’s biggest financial institutions, Maple Group Acquisition Corp. The move would, according to Reuters Canada, bring most of the country’s major exchanges under one roof.