March 10, 2011

More kerfuffle over the TMX / LSE merger:

Speaking to provincial legislators on Thursday, Howard Wetston, chairman of the Ontario Securities Commission, said the final decision will hinge on whether the controversial $3.1-billion deal is in the public interest.

Mr. Wetston said the OSC would “resist any watering down or diminution” of its responsibility over the Toronto Stock Exchange and that concerns around the impact of the merger on corporate governance are also “very relevant.”

In a two-page open letter, [TMX CEO] Mr. [Tom] Kloet restated his position that the merger would occur at the holding company level, and the TSX would continue to exist as a stand-alone operation with regulatory oversight remaining intact.

“It really is that simple — no foreign regulator, including the U.K. Financial Services Authority, will have any regulatory powers or influence over any of our Canadian exchanges, entities or issuers,” he wrote in the statement.

The Financial Post has published the full letter. It also excerpted remarks by Barbara Stymiest that I didn’t consider too impressive.

As for me … well, first off, I think the question that’s being asked is upside down. Government should only consider interfering if the transaction can be shown to be a net negative for Canada – if then – rather than the onus being on the transactors to show a net benefit. Whose business is it, anyway?

Secondly, I think that an underlying question is the power of the banks in the Canadian financial marketplace, which is basically total. A bigger institution with an international will be less likely to kowtow to the banks when push comes to shove. And that wil be a Good Thing.

And thirdly, I would like to see less government influence on internal operations: I am very concerned about OSFI’s attempts to debase the bond indices and would have greater faith in bond indices prepared by a trans-national corporation.

Another day of mixed results for the Canadian preferred share market, with PerpetualDiscounts gaining 1bp, FixedResets up 3bp and DeemeRetractibles getting smacked for a loss of 16bp. Volume was high.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -0.0951 % 2,396.8
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.0951 % 3,604.7
Floater 2.50 % 2.27 % 42,982 21.54 4 -0.0951 % 2,587.9
OpRet 4.88 % 3.65 % 56,351 1.18 9 -0.1202 % 2,389.8
SplitShare 5.09 % 2.93 % 200,441 1.03 5 -0.0776 % 2,484.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.1202 % 2,185.3
Perpetual-Premium 5.75 % 5.66 % 136,659 6.16 10 -0.1528 % 2,030.7
Perpetual-Discount 5.51 % 5.66 % 125,800 14.35 14 0.0061 % 2,117.3
FixedReset 5.21 % 3.47 % 205,710 2.98 54 0.0328 % 2,281.5
Deemed-Retractible 5.24 % 5.30 % 362,795 8.27 53 -0.1641 % 2,074.6
Performance Highlights
Issue Index Change Notes
SLF.PR.D Deemed-Retractible -1.66 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.34
Bid-YTW : 6.33 %
GWO.PR.M Deemed-Retractible -1.38 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-04-30
Maturity Price : 25.00
Evaluated at bid price : 25.10
Bid-YTW : 5.73 %
TD.PR.I FixedReset 1.09 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-08-30
Maturity Price : 25.00
Evaluated at bid price : 27.70
Bid-YTW : 3.18 %
RY.PR.L FixedReset 1.13 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 26.75
Bid-YTW : 3.24 %
CIU.PR.B FixedReset 1.31 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-01
Maturity Price : 25.00
Evaluated at bid price : 27.81
Bid-YTW : 3.22 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.L FixedReset 115,758 TD bought blocks of 20,000 and 10,000 from Nesbitt, both at 27.00; then crossed blocks of 27,500 and 27,000 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 26.75
Bid-YTW : 3.24 %
NA.PR.P FixedReset 96,944 Issuer bid.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-17
Maturity Price : 25.00
Evaluated at bid price : 28.30
Bid-YTW : 2.28 %
BAM.PR.B Floater 63,704 Desjardins crossed 50,000 at 18.90.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-03-10
Maturity Price : 18.80
Evaluated at bid price : 18.80
Bid-YTW : 2.82 %
BMO.PR.O FixedReset 60,180 RBC crossed 50,000 at 27.60.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-24
Maturity Price : 25.00
Evaluated at bid price : 27.70
Bid-YTW : 3.18 %
GWO.PR.J FixedReset 52,200 TD crossed blocks of 17,700 and 15,000, both at 27.00.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-01-30
Maturity Price : 25.00
Evaluated at bid price : 26.76
Bid-YTW : 3.29 %
PWF.PR.M FixedReset 50,825 TD bought 24,500 from anonymous at 27.00; Nesbitt crossed 24,200 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-02
Maturity Price : 25.00
Evaluated at bid price : 27.00
Bid-YTW : 3.38 %
There were 42 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
SLF.PR.D Deemed-Retractible Quote: 21.34 – 21.75
Spot Rate : 0.4100
Average : 0.2636

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.34
Bid-YTW : 6.33 %

TRI.PR.B Floater Quote: 23.01 – 23.99
Spot Rate : 0.9800
Average : 0.8406

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-03-10
Maturity Price : 22.72
Evaluated at bid price : 23.01
Bid-YTW : 2.27 %

PWF.PR.P FixedReset Quote: 25.53 – 25.91
Spot Rate : 0.3800
Average : 0.2598

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-03-01
Maturity Price : 25.00
Evaluated at bid price : 25.53
Bid-YTW : 4.04 %

CIU.PR.C FixedReset Quote: 25.23 – 25.70
Spot Rate : 0.4700
Average : 0.3568

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-07-01
Maturity Price : 25.00
Evaluated at bid price : 25.23
Bid-YTW : 3.65 %

W.PR.H Perpetual-Discount Quote: 24.30 – 24.62
Spot Rate : 0.3200
Average : 0.2124

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-03-10
Maturity Price : 23.31
Evaluated at bid price : 24.30
Bid-YTW : 5.71 %

CM.PR.M FixedReset Quote: 27.70 – 27.97
Spot Rate : 0.2700
Average : 0.1977

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-08-30
Maturity Price : 25.00
Evaluated at bid price : 27.70
Bid-YTW : 3.43 %

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