The threat to TMX Group Inc. (TMXGF.PK) of losing market share to alternative trading platform, Alpha Trading Systems Ltd, has to date been an empty one, says Blackmont Capital analyst Richard McCormick.

While Alpha has accounted for 10% of TSX-listed volumes over the past six months, Mr. McCormick said the semi-annual volumes on the TSX are up 26% year-over-year, its highest growth rate in two years.

TMX Group (TMXGF.PK) appears to be more than holding its own in the crowded trading portal sector, exceeding expectations by posting robust volumes and holding on to market share in August transactions.

Richard McCormick, analyst with Blackmont Capital, notes that TMX only lost 0.2% of monthly market share in the month, far less than the 1.7% he expected.

TMX Group Inc. (TMXGF.PK) expects its recently-announced adjustments to Electronic Liquidity Provider (ELP) pricing will have “an essentially neutral impact” on its revenues based on historical volumes, product and customer mix. The change eliminates the inverted pricing structure for larger ELPs as all providers will pay one rate.

Trading pricing is a zero-sum game over the long term, says GMP Securities analyst Stephen Boland.

The Dow Jones Canada Select Dividend Index represents 30 of the top dividend stocks in Canada. These stocks are selected to the index annually based on yield.

The index is up 29.04% year-to-date as of July 31, 2009 including reinvested dividends. Last year the index was down about 31%. The index's 10-year annualized return is 10.62%. One of the interesting features of this DJ Canada Select Dividend Index is that about 73% of the index is made up of financials. Telecom, utilities and energy form about 7% each.

News that Alpha Group will be lowering its trading fees effective August 1 could have a negative impact on market leader TMX Group Inc. (TMXGF.PK), particularly because Alpha is offering free Market Open trades.

TMX does not disclose what percentage of its trading volumes come from Market Open activity, but RBC Capital Markets analyst Geoffrey Kwan estimates as much as 5% of total volumes traded in Canada relate to these trades. He told clients that 2010 forecast GAAP earnings per share for TMX could fall by roughly C$.12 (or 4.5% of RBC’s C$2.65 forecast) for each 1% of Canadian volumes captured by Alpha for Market Open trading.

Shorting TMX Group Inc. (TMXGF.PK) is one of 20 investment ideas that investors should consider over the next three months, according to RBC Capital Markets.

In the most recent quarterly "best ideas" report, analyst Geoffrey Kwan noted that TMX's current stock price does not reflect near-term risks, which include market share erosion, pricing pressure, regulation of market data fees; and a cost structure that may be too high in a more competitive environment.

I think the message can be this: whether it be good times or bad times, stocks still have to trade. Which seems to bode good things for the TMX Group (TMXGF.PK) according to a research report from the Equity Analysts at Blackmont Capital:

“Analysis & Forecasts: So far June has been a strong month almost across the board for TMX. Based on our analysis, using the growth rates seen in TMX’s revenue drivers thus far in Q2/09 (ending June 30th), cash EPS could wind up in the $0.72 range, which is at least 16% above current $0.62 consensus expectations as well as Q1/09 results. We expect significant revisions (including our own) in the coming weeks when the full data is released. Specifically, quarterly cash equity trading volumes are up 17% sequentially despite losing 1.9% in market share to Alpha in June. IPOs are set to rise over 250%, while secondary/supplementary equity financings are up more than 15% from Q1/09. Montreal Exchange’s 3 key derivatives products are set to see quarterly growth of 10% (30% Q/Q for its most important derivative product, BAX).

The 4% drop in financials stocks on Monday may be the start of more bad days to come, as the current bear market run loses steam, says Dundee Securities analyst John Aiken.

But not all companies in the space are created equal, he adds, and wise investors may want turn their attention on Canada's large-cap asset managers, in an effort to navigate through a likely downward trend.

One company having no troubles these days is TMX Group Inc. (TMXGF.PK). The stock has risen 33% since the start of the new year and by Stephen Boland's estimation, the run its on won't end there.

"X continues to appreciate quite strongly in the market," the GMP Securities analyst said in a note to clients. So strongly in fact that it only sits 6% off Mr. Boland's C$34 price target. Nonetheless, he continues to rate the shares a "buy."

Northrop Grumman Corp. (NOC), the world’s largest warship builder, recently took a goodwill impairment charge of $3.1-billion in the fourth quarter for acquisitions made back in 2001 and 2002. Several other companies have made similar announcements recently, but Time Warner Inc.’s (TWC) C$25-billion writedown really put the issue back on people’s radars.

Among other periods, the buildup of goodwill and intangible assets on corporate balance sheets became an issue during the dot-com bubble. So with earnings season in Canada gearing up next week, the market is keeping a lookout. Desjardins Securities reviewed every member of the S&P/TSX composite index to identify those with abnormally high goodwill and/or intangible asset exposure, which may be at risk of similar writedowns.

In a Bay Street version of "good cop, bad cap," GMP Securities analyst Stephen Boland and Dundee Securities' John Aiken weighed in on TMX Group Inc.'s (TMXGF.PK) latest quarterly results with two very different conclusions.

Mr. Boland maintained his "buy" rating and C$34 price target on TMX stock, after the exchange reported fourth quarter profit of C$49-million or C$0.65 a share, compared with a profit of C$30.4-million, or C$0.45 a share this time last year.

Stephen Boland, analyst with GMP Securities, has taken a quick look at TMX Group Inc.'s (TMXGF.PK) buy back activity and predicts the company will repurchase on average 1 million shares per quarter going forward.

He said TMX will likely use cash from operations, – $54.3-million in Q3 and $183.4-million year-to-date – to fund the buyback and also its $1.52 per share dividend. If not, the company could dip into its current cash position of $200-million to fund the repurchases, he added.

GMP analyst Steve Boland kept his "buy" recommendation on TMX Group (TMXGF.PK) but shaved C$1 off his share price target after the Toronto Stock Exchange owner posted third-quarter earnings in line with expectations.

In a note Mr. Boland commended the company for maintaining it revenues despite the turmoil on financial markets, though at the same time he said he remains "cautious" about estimates going forward.

The TSX Completion Index, those names not include in the large-cap TSX 60, may not come to mind at first when investors are looking for dividends, but there are a handful of them that have very solid track records of dividend growth since 1995. UBS strategist George Vasic highlights four financials and eight consumer/industrial stocks that make his list of dividend growers. And there are four other financials on their way.

“These mid and small cap selections can be an attractive alternative to those from the TSX 60,” he told clients. “The reason investors need to pay attention to the dividend growers outside the TSX 60 is that they have uniformly outperformed their large cap peers within the 60.”

Dundee Securities analyst John Aiken lowered his second quarter earnings estimate for TMX Group Inc. (This is based on lower than expected transaction volumes in both the derivatives and equity business.) In a research note late last week, Mr. Aiken predicted the owner of the Toronto Stock Exchange and Montreal Exchange will post earnings for the three months ended June 30 of C$0.74 per share, down from a previous estimate of C$0.77.

Mr. Aiken maintained his "buy" rating on the shares, warning at the same time that the company faces a "challenging" outlook. TSX Group, which completed its merger with the MX at the end of April, is expected to release its second quarter earnings on Wednesday.