TSX to enter derivatives business in '09

The company that runs the Toronto Stock Exchangesays it's going to challenge the Montreal exchange in the lucrative derivativesbusiness in 2009.

That's when a 10-year deal, which gave Montreal a monopoly on derivatives trading, runs out.

The TSX Group said Monday that it is teaming up with aU.S. partner, International Securities Exchange, to invest about $26 million to start DEX, a derivative exchange scheduled to open in March 2009.

"DEX will pair TSX's pre-eminent position as the leading Canadian market for Canadian securities together with ISE's superior derivatives trading platform," the companies said in a release.

DEX will be 52 per cent owned by TSX Group and 48 per centby ISE. It will trade options, futures and options on futures on some Canadian securities.

The Montreal exchange, which is seeking to have its stock listed in Toronto,reported recently thatrevenue has been growing almost 25 per cent a year, while profit increased to $24.9 million in 2006 from about $100,000 in 2002.

The TSX also has been highly profitable, reporting profitof $131.5 million on revenue of $352.8 million in 2006.

The TSX Group has an energy trading business, the Natural Gas Exchange, where natural gas and electricity contracts are traded.

In February, the Montreal exchanged teamed up with the New York Mercantile Exchange to create a new energy business to trade trading crude oil, natural gas and electricity products.