Search for new head of TMX Group underway as CEO prepares for retirement

Photo: The Canadian Press. All rights reserved.

Toronto Stock Exchange CEO Tom Kloet sits for a portrait in Toronto on June 28, 2013. With his retirement looming at the end of August, Kloet says his successor will have to look for growth beyond Canada's borders. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - With his retirement looming at the end of August, the head of TMX Group (TSX:X), the operator of the country's largest stock market, says his successor will have to look for growth beyond Canada's borders.

"It's essential," said chief executive Thomas Kloet, following the company's annual general meeting Friday.

"I think that the company will continue to play an ever increasing international role. That's the strategy we're placing forward."

Kloet said TMX Group, which owns the Toronto Stock Exchange, the TSX Venture exchange, Montreal derivatives market and others, will continue to pursue opportunities where they can offer services to international markets, with an eye towards Latin America and Asia.

Kloet took the reins at the company in 2008, shortly after its merger with the Montreal Exchange and as the industry headed into a period of consolidation. He said during his six-year tenure, he's completed all he has wanted to do, and is ready for a break.

"I think I gave the institution my best for six years and I think a new leader will take it to the next level," he said.

The board of directors has set up a search committee which is considering internal and external candidates. Kloet said the plan is to have his replacement on the ground by the time he leaves on Aug. 31, but if doesn't happen, he's open to staying on until a successor can be named.

"It's my hope that we have this before I leave, but the important thing is to get the right person, not to get a person by a certain day," said Kloet.

Before joining the company, Kloet was the CEO of Singapore Exchange Ltd. where he oversaw the integration of the country's stock and monetary markets, as well as an initial public offering. The TMX is expecting to open an office in Singapore later this year.

"This isn't the old TSX, this is a complex organization with offices around the world and regulators around the world that we have to answer to, so we have to do it right," he said.

Under his leadership, the TMX Group has grown and diversified enough to help it cushion the impact of volatile markets in the future.

The company is also expanding into the private sector with TSX Private Markets, a new business aimed at helping Canadian startups raise money and eventually go public.

Earlier this month, the TMX Group reported a 23 per cent bump in profits as trading and clearing volumes picked up during its latest quarter.

For the first quarter ended March 31, TMX Group earned net income of $46.4 million, or 86 cents per share, in its first quarter ended March 31. This compared with net income of $37.8 million, or 70 cents per share, in the same quarter a year earlier. Its adjusted earnings per diluted share was $1.05, excluding acquisitions and other costs. That's up 35 per cent from 78 cents in the same quarter last year.

Revenue for the quarter came in at $182.1 million, up six per cent, from $172.2 million in the same period of 2013.

Kloet told shareholders trading volumes at its Calgary-based Natural Gas Exchange were boosted in the first quarter due to volatility linked to a severe winter, joking that he finally found a "good reason to experience the winter we did."

The TMX Group has long been dealing with either flat or declining number of new companies listing on the Toronto Stock Exchange, an area where competition is going to intensify with the arrival of the new exchange, Aequitas Innovations Inc., later this year.

Aequitas, which is backed by Royal Bank (TSX:RY), BCE Inc. (TSX:BCE), Canadian pension fund PSP Investments, and a number of Canadian and international brokerages, is awaiting regulatory approvals and is aimed at tackling abusive behaviours related to high-frequency trading.

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