The merger mania in the exchange space took another

twist last week when a consortium of Canada's largest banks and

pension funds put forward

href="http://www.theglobeandmail.com/news/opinions/editorials/canadian-tmx-bid-carries-hints-of-economic-nationalism/article2024051/"

target="_blank">an alternative offer for TMX in an

attempt to scupper the

href="http://www.londonstockexchange.com/about-the-exchange/media-relations/press-releases/2011/lsestatementontmx.htm"

target="_blank">LSE Group's own merger proposals

with the

target="_blank">Canadian exchange.

There's a clue to the consortium's basic pitch in its

name - the Maple Group - and the rhetoric

from its spokesman Luc Bertrand, who cites the fact that Canadian

jobs will be saved in his all-Canada solution. This argument

resonates well with domestic concerns over the

href="http://www.londonstockexchange.com/home/homepage.htm"

target="_blank">LSE's "merger of equals" as the LSE

would have control over the combined group. History has shown,

however, that protectionism only really works if the country

concerned has some form of natural monopoly or real financial

firepower (e.g. China).

So, will a

Canadian-only stock exchange really be able to compete in the

global exchange space and can Canadian capital markets really

wait it out on the sidelines whilst other exchanges find

partners? If the answer to either of these questions is in doubt,

then maybe the LSE Group's bid is actually the better outcome for

Canada.

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