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Quebec to hold public hearing on the LSE acquisition of TSX

If it was not so sad, I would laugh!  Really, this is what the Quebec government focus on?  Lets be clear, Quebec has some very strange securities rules.  For example, you cannot have a IPO sold in Quebec unless the offering documents are fully translated into French... not even the French securities regulator requires this, so when there are global IPO (like Visa a few years ago), Quebec and North Korea are the two places in the world where you could not buy the IPO (no kidding here).  However, once the stock is listed you can buy it on the secondary market! 

Quebec's politicians want Montreal to retain the derivatives business/expertise, sounds a reasonable position -- but public hearing?  The Montreal branch of the TSX does all the derivative transactions on Canadian securities (Puts, Calls exotics etc), this was a condition for the acquisition of  the the Montreal Stock Exchangeby the TSX.  Public hearing seems a bit much:  First, the derivatives market is primarily an institutional market; most retail investors' understanding of securities precludes them from investing in derivatives,  second most retail brokers don't have a derivatives license (for very very good reasons). Finally, Canadian and foreign institutional investors don't actually care where the derivatives are listed, they care about cost and liquidity.  

Quebec's only issue is that the London Stock Exchange maintains the TSX/MX agreement on derivatives... that's about it.  

Unfortunately for the great majority of Quebec based investors this is not the issue that should be addressed.  The real problem for Quebec based investors -- they cannot participate in global IPOs and a greater and greater number of Canadian IPOs bypass Quebec entirely because of a "French" prospectus requirement.

BTW a substantial portion of my day job requires me to read prospectus and other legal documents, I speak excellent French but would NEVER read a prospectus in French, because they don't use capitalized terms it makes it almost impossible (even for professionals) to understand the nature of the underlying transaction described.

Yet because of "language" and "Cultural" issue it is literally impossible to have an adult discussion about this, and the government would never dare to open a discussion on this -- but they will hold public hearings on the derivatives market... what a joke!

Finally, my guess is that the transaction has a high likelihood of failing, the Ontario Government is almost certain to impose impossible conditions:  they're the one getting screwed here!  The Ontario minister of finance was a great fan of merger of the TSX and MX and of the creation of a Canadian SEC, as a means of consolidating Toronto's position as the financial capital of Canada.  His support for the Pan-Canadian SEC has blown up in his face -- with the proposed decentralized structure, and now the TSX is being taken over by the Brits.... Dwight Duncan that's bile you are tasting!

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