Interactive Data opens Toronto Stock Exchange, March 15, 2011.

Shortly before 1 PM ET today it was announced that the “proposed merger of the TMX Group Inc. with the London Stock Exchange Group PLC is dead.”

As explained by the official TMX statement: “TMX Group Inc. has agreed with London Stock Exchange Group plc (LSEG) to terminate their merger agreement … A majority of shareholder votes cast by proxy prior to the June 28, 2011 proxy cutoff supported the merger resolution; however, it is clear that the two-thirds threshold required to approve the merger would not have been achieved.”

The Wall Street Journal further explains: “The merger proposal’s termination paves the way for a consortium of 13 big Canadian financial firms to try to push ahead with its own, hostile C$3.8 billion bid for the operator of Canada’s flagship Toronto Stock Exchange.” In the words of Agence France-Presse (AFP): “The move opened the way for the possible takeover of the TMX Group, which operates the Toronto and Montreal stock markets, by a consortium of Canadian banks called the Maple Group which had launched a rival $3.8 billion bid to the LSE’s.”

It is no doubt impossible not to have some concerns about the monopoly implications of the Maple Group proposal. Phrases like “13 big Canadian financial firms” and “a consortium of Canadian banks” have their own sharp edges inside Canada. As one analyst has put it: “I’m not surprised. I had thought Maple was going to get this deal done. And that their lobby was very effective…Now we need to see what the competition bureau thinks of Maple.”

Old home of the Toronto Stock Exchange on Bay Street, 1937–1983, now home to the Design Exchange, “a design museum and centre for the advancement and promotion of Canadian design.”

Or as the same analyst — Alison Crosthwait, Director of Global Trading Strategy at Instinet — explained last week, perhaps anticipating today’s final result: “I don’t think the case is made strongly enough for TMX-London — they sort of rolled over, to some degree. I would just like to see more aggression as to why this [ie the Maple Group proposal] is a really good thing — I mean, you sell me on it. Everybody has gone with this fuzzy feel-good about Canadian control — what does that mean?”

Yet when all is said and done we find ourselves nodding in agreement with Ontario finance minister Dwight Duncan: “I think this is Canadians asserting themselves … What I find particularly appealing about the circumstance here is that it was the shareholders themselves who did not accept the LSE bid. This was not rejected by government.”

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Again, some will still want to raise doubts about Mr. Duncan’s further enthusiasms: He “was one of the most vocal opponents of the proposed deal between TMX Group and the London Stock Exchange. While he was reluctant to directly intervene by blocking the proposal out of fear of sending a message to international investors that Canada is not open for business, he has emerged as a big supporter of the rival Maple bid … ‘This is a market-based solution,’ Mr. Duncan added, noting that some of the country’s largest banks, insurers and pension funds came together not by ‘government fiat’ but by ‘leading in the world on financial services.’”

Postcard of interior crowded floor of old Toronto Stock Exchange building in the 1960s. Chuckman’s Other Collection, Toronto Postcards, Volume 0.

Yet once again, we finally find ourselves coming down on the side of a parallel column by David Olive in the Toronto Star, published just before today’s announcement, and provocatively headlined “Yes to Canada by voting ‘no’.”

Mr. Olive went on (and, to repeat, just before TMX stockholders cast their ballots — or, more exactly, before the results of earlier proxy votes were officially announced just before 1 PM ET): “The rejection or approval today by shareholders of TMX Group Inc. of a takeover offer for their company will mark a turning point in Canadian history. Either we have confidence in a Canadian owned and operated financial sector, or we don’t. That’s what’s at stake today.”

He elaborated still further on what he saw as the crucial issues: “A ‘yes’ vote today delivers a mere 45 per cent of the combined entity’s stock to existing shareholders. The new enterprise would be directed from London by a foreign CEO and a board controlled by LSE appointees … The TMX has evolved into one of the world’s best-run exchanges by most measures. If one were to hitch one’s wagon to a brighter star, LSE wouldn’t be the choice. TMX outclasses LSE in 2010 net profit margin (36.8 per cent versus 23.2 per cent), return on assets (7.3 per cent to 0.2 per cent) and return on equity (25.8 per cent to 15.4 per cent).”

It is probably also worth underlining that if a simple 50% + 1 majority had been good enough, the proposed merger of the TMX Group Inc. with the London Stock Exchange Group PLC (LSEG) would have gone ahead. As made clear in a story by QMI Agency — the news gathering organization of Quebecor Media — posted as early as 12.09 PM ET today: “the LSEG only gained backing from 54% of shareholders who voted by proxy, prior to an official meeting to decide on the deal slated for Thursday. That made it virtually impossible to get the support of two-thirds of shareholders needed for the merger to go ahead.” (And to complete the picture here: “Roughly 70 per cent of shareholders voted by proxy.”)

Exchange Tower at corner of King and York Streets, new home of the TMX, 1983–present. Photo: Rod Taylor.

It may be that Alison Crosthwait, Director of Global Trading Strategy at Instinet, still has something of a point, from an altogether global village perspective: “Everybody has gone with this fuzzy feel-good about Canadian control — what does that mean?” Yet in the very end the TMX-LSE merger was just too redolent of Canada’s old colonial relationship with its old Mother Country of the United Kingdom, headquartered in the same old imperial metropolis as the London Stock Exchange. Globalization in the 21st century does not mean that the Canadian confederation of 1867 is about to altogether give up on the journey from Colony to Nation, heralded by the historian Arthur Lower, in the wake of the Second World War. Those who think that the upcoming Canadian visit of William and Catherine is somehow going to generate some sparkling new “conservative” commitment to the British monarchy in the most northern regions of North America might want to bear this in mind.

Press release poster for Francesca Woodman exhibition at the Victoria Miro Gallery in the Islington neighbourhood of London, 16 November 2010 — 22 January 2011. Ms. Woodman was born in Denver, Colorado in 1958 to artistic parents. She spent parts of her childhood in Florence, Italy, and her late teens in Rome. She began taking her remarkable photographs when she was 13. She committed suicide in New York in 1981 — the Sylvia Plath of photography.

In 1933 the incomparable Percy Robinson published his still too-neglected minor classic, Toronto during the French Regime, 1615–1793. In the book’s last chapter he noted how, in the 1930s, the capital city of Ontario (then still only the second-largest city in Canada, behind Montreal) was “the citadel of British sentiment in America.”

Over the subsequent three-quarters of a century things have changed — and not just because wave after wave of global migrants from an increasingly vast diversity of non-British origins have moved to the Toronto region. Many long-established residents whose parents and grandparents and great grandparents were of British and other origins have come to think of themselves as Canadians, first, second, and last.

“Last week I went to an exhibition of photographs by Francesca Woodman ... I'm really glad I did because the work is wonderful.”

In the early 21st century city region the proposal for a London Stock Exchange merger with (or some would stress, takeover of) the Toronto Stock Exchange, suddenly made public in the wake of last Friday’s Canada-US “Beyond the Border Working Group” announcement in Washington, is bound to have a kind of old neo-colonial ring in many local and even regional ears.

So “Ontario Finance Minister Dwight Duncan [from faraway Windsor, just across the river from the old French Canadian fort at Detroit] expressed major concerns about the transaction, saying London would end up controlling the merged entity and that the deal raises many unanswered questions … ‘This is a significant development that affects our capital markets, that affects our country, that affects our place in the world.’”

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Many other things in the global village have also changed over the past three-quarters of a century of course. In fact the merger/takeover proposal involves the London Stock Exchange (LSE) and something known as TMX Group, which “owns and operates …  the Toronto Stock Exchange, and the TSX Venture Exchange … the Montreal Exchange, the Natural Gas Exchange and the Boston Options Exchange.”  And the TSX Venture Exchange alluded to here “is headquartered in Calgary … and has offices in Toronto, Vancouver, and Montreal. It was previously known as the Canadian Venture Exchange … created by the merger of the Vancouver Stock Exchange … and the Alberta Stock Exchange.”

Francesca Woodman, Giuseppe Gallo. Rome 1978.

The current CEO of TMX Group, Thomas A. Kloet, is an American, who “graduated … from the University of Iowa in 1980,” and among many other things was previously CEO of “Singapore Exchange Ltd.” (which has more recently merged with the Australian stock exchange). The current CEO of the London Stock Exchange (LSE — also short for London School of Economics, but forget about that) is Xavier Rolet, a native of  Aix-les-Bains, France, and graduate of Columbia Business School in New York, whose previous employers include Goldman Sachs, Credit Suisse First Boston,  Dresden Kleinwort Benson, and  Lehman Brothers in France.  And for added international glitter here, the Borsa Italiana, based in Milan and “Italy’s main stock exchange … was acquired by the London Stock Exchange in 2007.”

In Canada alone the proposed LSE-TMX deal must be approved (it already seems clear enough) by “regulatory gnomes in Toronto, Montreal and Ottawa.” And: “While LSE and TMX executives stressed repeatedly that the union was a ‘true merger of equals,’ it is clear that the LSE will have the upper hand … In addition to taking the CEO’s seat, LSE shareholders will own 55 per cent of the new group, with TMX shareholders owning the rest. The new company will have 15 directors, eight from the LSE and seven from the TMX, meaning LSE appointees will have control of the boardroom.”

Will that finally be good for Canada? As in the case of the new Canada-US Beyond the Border Working Group, 2011 is shaping up as a year of profound naval gazing about the Canadian future — which maybe even ought to take place in the context of yet another federal election campaign?

Frances and friend. Hardly pornography, but ... what? Angelic, some suggest? Powerful darkness others say?

Some immediate reaction from across the pond also suggests that certain questions are already being raised in the old imperial metropolis too. Nils Pratley at guardian.co.uk, has just written: “On Wednesday morning the London Stock Exchange thought it had secured a deal to join the top division of global exchanges: a ‘merger of equals’ with TMX of Canada to create a combo ranked fourth by revenues. At teatime came news that Deutsche Börse and NYSE Euronext, numbers two and three by size, are in merger talks … their move has thrown a large spanner in the works for the LSE and TMX. Shareholders in both companies will rethink. Rather than merging, would it be better to wait until the tide of consolidation produces a takeover bid at a (hopefully) fat premium? … For now, Xavier Rolet, chief executive of the LSE, probably has to plough on with the merger talks with TMX. Completion is not due until October, which leaves time to explore alternatives. Rolet clearly has to find a deal of some sort —  but it’s not obvious that Canada is still the best place to look.”

Mmmm … stay tuned of course. It seems likely enough that there will be more than a few further cases of “the plot thickens” on this file.

There is a discussion of the Victoria Miro Francesca Woodman photographs that accompany this article, by Brian Dillon, in the 20 January 2011 issue of the London Review of Books.