From the get-go, Maple Group Acquisition Corp. made wrapping the Canadian Depository for Securities Ltd. and Alpha Group into its bid for TMX Group a crucial part of its plan. But for the longest time investors weren't sure of what exactly Maple Group planned to do with fees.
It was particularly important question for CDS because 96 different dealers use the services it provides, and CDS has a history of lowering fees. However, the pension funds in the consortium need a hefty return to satisfy their policy holders.
On a conference call Monday, Luc Bertrand, the public head of Maple, made sure to quell any investor concerns. "Maple's plan is to preserve open access to CDS's clearing services -- that's for all ATSs -- while maintaining competitive fees and without introducing a two-tier pricing model."
Mr. Bertrand already said some of this in an op-ed in The Globe and Mail last week, so it's already been known. But he went even further on Monday.
"The modelling that we did... was not based on price increases," he said. Moreover, "the fee structure will remain very competitive because we want to grow the market share."
However, one of the big problems is that TMX doesn't have access to CDS and Alpha Group's numbers, so they've been relying on publicly available information. So how can they know for sure that they won't need to raise fees?
Mr. Bertrand admitted that their estimates are mostly based on assumptions, but he did note that it's not as though it's just one organization that's taking this leap of faith. "We've all done some extensive modelling on the synergies and the cross-synergies, and everybody here comes to the same conclusion," he said.
Tim Kiladze