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The Toronto Stock Exchange (TSX:X) got a backhanded bitch slap from Canada's biggest banks. In the month of March they announce a series of partnerships with International Securities Exchange (NYSE:ISE) for derivative trading platforms. Sounds good as it expands depth and breath and all that good stuff.

Then we have Alpha announced. Alpha will consume approximately $100 million in capital to develop an alternative trading system to allow the Big Canadian Banks to trade securities among themselves and reduce those nasty friction costs. The problem is that the Canadian Banks make up a very large portion of trading volume.
Toronto Stock Exchange shares dropped approximately 10% because in Canada investors large and small respect and fear the big 5. What is to be done? The TSX will soldier on and look for more listings (They currently have a US road show underway)

Both Nasdaq (NASDAQ:NDAQ) and NYSE (NYSE:NYX)have been beating their brains out attempting to acquire other exchanges. I am sure they have looked at Toronto which is so close and keeps scooping up US listings. Watch for a flanking move by Toronto Stock Exchange to hook up with one of these two. Canadian Banks may be left with a cupcake as the whole pie does what it has to do and joins the big leagues.

Interesting Side bar note: The current COO of Royal Bank of Canada Barbara Stymiest was only just recently CEO of Toronto Stock Exchange. Prior to joining TSX, Ms. Stymiest was Executive Vice-President and Chief Financial Officer for Bank of Montreal’s investment banking division. It's all there on her bio on the Royal Bank of Canada web site.

The Big Five Canadian Banks are Royal Bank of Canada (NYSE:RY), Canadian Imperial Bank of Commerce (NYSE:CM), Bank of Montreal (NYSE:BMO), Toronto Dominion Bank (NYSE:TD), Bank of Nova Scotia (NYSE:BNS). Also involved with Alpha is Canaccord which is an independent brokerage originally started in Vancouver with long roots in the resource financing sector ((TSX:CCI)

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