Restructuring of the Canadian Stock Exchanges

OTTAWA, November 17, 1999 — The Competition Bureau announced today that it will not challenge the restructuring of the Canadian Stock Exchanges.

The Vancouver, Alberta, Montreal and Toronto Stock Exchanges announced on March 15th that they had signed an agreement in principle to restructure the Canadian capital markets. As a result of the agreement, there will be a consolidation of listings of senior companies on the TSE. The ME will be responsible for the trading of Canadian futures contracts and options, including those options currently traded on the TSE and the TSE futures products currently traded on the Toronto Futures Exchange. The majority of junior listings will be consolidated into one national junior market operated by a merged Alberta and Vancouver Stock Exchange (the Canadian Venture Exchange), which will also assume responsibility for the trading operations of the Canadian Dealing Network, a subsidiary of the Toronto Stock Exchange. As a result of an agreement announced on November 11, 1999, trading for some junior Québec-based companies will continue on the ME.

The Exchanges notified the Commissioner of Competition of their intentions at the time of the announcement of their agreement because of potential merger issues arising from the agreement. Subsequently, it was made public that a group of independent futures traders from the TFE had complained to the Bureau about the impact of the agreement on the operations of the TFE.

The mandate of the Competition Bureau is to maintain competitive markets. The Bureau's review focused primarily on whether the proposed agreement was likely to prevent or lessen competition substantially. The Bureau has concluded that there would not be grounds to challenge the merger aspects of the announced agreement. This conclusion was arrived at partly in light of the recent policy announcements by the Canadian Securities Administrators concerning their intentions to remove the current regulatory barriers that prevent the establishment of Alternative Trading Systems. The Bureau also examined the specific issues set out in the complaint from the independent traders and has concluded that the agreement will not lessen or prevent competition in the trading of options and futures contracts in any fashion. In this regard, the terms of the agreement specifically states that members of the TFE will have access to the ME trading facilities on a non-discriminatory basis. Furthermore, the agreement in no way creates barriers for new entrants wanting to trade in these products. The Bureau also determined that it would not be possible to challenge the agreement under the refusal-to-deal provisions of the Competition Act.

On the basis of the facts found during the examination, and for the reasons noted above, there are no grounds to proceed with an application to the Competition Tribunal or a referral to the Attorney General of Canada under the criminal provisions and the examination is closed.

For more information, please contact:
Julie Hébert
819-953-4257