George Cope, President and CEO of Bell Canada and BCE Inc speaks to The Globe and Mail editorial board on July 25, 2013.Gloria Nieto/The Globe and Mail
BCE Inc. chief executive George Cope brushed off questions on Thursday about the rationale for the company's backing of a nascent Canadian stock exchange, saying that it's immaterial for the telecom firm.
"I think we've done a very, very small private equity investment in it," he said of Aequitas Innovations, which is planning to launch a stock exchange that will go head-to-head with the Toronto Stock Exchange. "It's a private investment in a private company, and I really don't want to comment on that other than to say that it's completely immaterial for BCE from a financial perspective."
Aequitas' founders are Royal Bank of Canada, Barclays Corp. Ltd., CI Investments Inc., IGM Financial Inc., ITG Canada Corp. and PSP Public Markets Inc. Citing sources, the Wall Street Journal reported this week that BCE and the Ontario Municipal Employees Retirement System are also now backing the exchange, but the telecom firm and pension plan had remained mum.
The founders' decision to reach out to a broader group of players mirrors the strategy that the Maple Group used when garnering support for a takeover of the TMX. That group decided to try to expand its membership beyond banks and pension funds, recruiting firms such as insurer Manulife Financial and independent securities firm Dundee Capital Markets, in an effort to show that it had diverse support.
Aequitas, which is already in talks with regulators but plans to file a formal application later this year seeking the right to run an exchange, is promoting itself as a solution for investors who don't think the current system is fair. It seeks to appeal, for instance, to investors who are frustrated by certain tactics of high-frequency traders (who use technology that enables exceptionally fast trades, giving them an edge over other investors).
"Aequitas was founded by a group of stakeholders who believe today's equity marketplaces do not provide the public with the fairness, efficiency and choice that encourage confidence and participation by investors, issuers and dealers," its position paper states. It is also saying that the Maple Group's takeover of the TMX Group is making matters worse, because it resulted in a large concentration of services in one marketplace (the TMX).
Royal Bank, which is one of Aequitas' chief founders, had been one of the London Stock Exchange Group's advisers when it sought to merge with TMX, a deal that fell through and was ultimately superseded by a friendly agreement with the Maple Group.
(Tara Perkins is a Globe and Mail real estate reporter.)
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