On Wednesday, Maple Group appeared to have cleared the final regulatory hurdles to its takeover of TMX Group, as the federal Competition Bureau and the Ontario Securities Commission both gave their approval to the deal.
But late in the day, the British Columbia Securities Commission unexpectedly filed a draft recognition order outlining a series of demands before signing off on the proposal. Commenting to CBC News on Thursday, a source inside the BCSC disputes the notion that the move is "late" in the process, noting it has been engaged with Maple Group since the start of the process and sent the latter a detailed list of their concerns dating back to December 2011.
According to a Bay Street source familiar with the process but who asked to remain nameless, the B.C. regulator is concerned that the deal would concentrate too much power in Toronto. Under the deal as it's currently constructed, 85 per cent of all stock and derivative trading in Canada would be controlled by Maple Group.
In a filing, the regulator said the deal as currently constructed would create "significant conflicts of interest, for anti-competitive behaviour, for inappropriate access to market information by Maple owners that is not available to competitors."
The regulator also fears there are risks related to smaller companies and pointed out that half of the companies that trade on the TSX Venture Exchange are based in B.C. As such, the regulator is demanding that 25 per cent of the members on Maple Group's board should have experience running small companies.
The regulator also wants to ensure that there's a commitment to keeping senior jobs in Vancouver.
"The lobbying pressure is so intense, from every level, so they will approve it," the source said. "But, they will try and get as much for themselves as possible."
The source also said that Alberta's regulator, which has also yet to sign off on the deal, will be watching current developments closely and will be likely to make similar demands.
In a statement to CBC News, Maple Group said they remain "optimistic" that the regulator's concerns can be addressed, and that the deal will proceed by the end of July.
TMX shares moved very little on the news, shedding 16 cents to $48.25. Maple's offer is for $50 a share.