FTSE and TMX join forces to create a fixed income index

Marion Dakers
FTSE Group and Canadian exchange operation TMX yesterday agreed to combine their fixed income businesses, in a tie-up to increase FTSE’s profile in North America and bolster both firms’ position in the index market.

FTSE, part of the London Stock Exchange Group, will be the majority stakeholder in the joint venture, owning a 75 per cent stake. It will open an office in Toronto to run the venture.

The new business will be the world’s third-biggest index provider for fixed income exchange-traded funds (ETFs), acting as a benchmark for C$1 trillion in assets.

“In partnering with TMX Datalinx we can quickly create the scale, quality of operation and global distribution necessary to be a significant player in this rapidly evolving part of the index industry,” said the chief executive officer of FTSE Group Mark Makepeace.

TMX will receive C$112.2m (£72m) under the terms of the deal, funded from existing LSE cash resources.

The transaction is expected to slightly hurt TMX’s earnings per share in 2013, the companies said in a statement.

Index operators have been jostling for position in recent years, prompting a number of mergers, acquisitions and joint ventures.

TMX was last year taken over by a consortium known as Maple Group, while Deutsche Boerse and CME were this week reported to have been in talks – though the discussions have since ended.

The London Stock Exchange last year bought LCH. Clearnet has been linked with several potential tie-ups including the Singapore Exchange.