Tom Kloet, the new CEO of Toronto-based TMX Group Inc., is not only stickhandling the transformation of Canada’s biggest stock exchanges, he’s doing it in the glare of extraordinary market conditions.

Only a few months after Kloet stepped to the helm of TMX this past summer, the S&P/TSX composite index began its historic slide, plunging to 8515.45 points by Dec. 12: on July 14, the day Kloet took up his new responsibilities, the index was still at a relatively lofty 13,741.29 points.

But Kloet, 50, a native of Minneapolis, is sticking to his vision of integrating the Toronto Stock Exchange with the Montreal Exchange Inc. Kloet also remains committed to expanding TMX’s international presence.

“Integrating the Canadian cash and derivatives market will help TMX,” he says, “and the broader capital markets of Canada to be more globally competitive.”

Changes have already begun. In November, TMX announced it would be laying off 85 staff members, part of plans to consolidate its data centres to one office in Toronto; the layoffs are expected to realize $25 million in cost synergies.

However, it’s also expected that 30 additional staff will be added to the company’s derivative operations in Montreal. “When we consolidate functions,” Kloet says, “it gives us two things: savings and creating additional revenue opportunities.”

Blending two markets together is nothing new for Kloet. Prior to his previous position running the Chicago office of brokerage Newedge USA LLC, Kloet was the first CEO of Singapore Exchange Ltd. In that role, he merged the stock exchange of Singapore with a derivative market, the Singapore International Monetary Exchange, to become the SGX Inc. He also led SGX’s initial public offering in 2000.

“When I took the job in Singapore, I felt as if I had a chance to contribute to capital market development,” Kloet says. “The fact that Canada has the chance to combine its markets in a single holding company was a place in which I thought I could add value and realize the vision.”

Under Kloet’s strategy, TMX will become the central entity and its six business arms will branch out from that corporate head. For example, TSX Datalinx will become TMX Datalinx, TSX Exchange Group will become TMX Markets, and so forth. “It’s a change that’s consistent with other exchanges around the world,” he says. “The TSX of the past, the one our parents knew, which was a member-owned mutual, is now gone. Exchanges now are more like holding companies, with a diverse group of products underneath the umbrella organization.”

Once there is a more united core organization, Kloet plans to expand TMX’s listing services in emerging markets around the world. The company has already begun doing road trips to China, in search of startups and mid-cap resources companies that may be attracted by the opportunity to expand into Canada and gain a listing on this country’s largest exchange.

“As China grows as a resource centre, we look at expanding opportunities for its companies to trade on the TSX Venture Exchange, particularly with expertise in energy [and] raw materials,” says Kloet. “One of the key lifebloods of an exchange is the flow of new listings into it.”

With that in mind, TMX will also be pursing companies in South Africa, Australia and Israel in the technology and natural resources sectors.

Another strategy will be building TMX’s expertise in the derivative and options markets; a key aspect of that initiative will be the integration of TMX’s interest in the Boston Options Exchange Group LLC. (The Montreal Exchange acquired 53.2% of BOX in August 2008.)

“With respect to BOX, the organization is still getting its feet wet,” says Kloet. “We’re still wrestling a little bit with consolidation. It’s also further complicated by the fact it’s in a different regulatory scheme [than Canada].”

TMX will also be unveiling new technology initiatives, as well as a revised fee schedule. These moves are crucial to retaining trading volumes against several rival marketplaces, according to Kloet, including the Toronto-based Canadian National Stock Exchange; Pure Trading Inc. , a subsidiary of CNSX; and Alpha Group. New technologies include TMX’s “smart order” router, a mechanism that will direct trades to the marketplace offering the best price. Also, as of June 2009, TMX will make it easier for customers to access its various equities markets through a single electronic gateway. Future plans include developing a single gateway for equities and derivatives trading.

@page_break@And a new business initiative will see expansion of the Natural Gas Exchange Inc. of Calgary, which currently trades natural gas and electricity, to include crude oil.

Kloet’s global experience began early. His father, an executive with Illinois-based Caterpillar Inc., was posted to Brussels and took the family to live in Belgium for six years. Back in the U.S., Kloet found himself following the lead of his two older brothers, both in financial services, when he chose to pursue a bachelor of business administration at the University of Iowa in 1980.

After graduating, Kloet moved on to the Chicago Mercantile Exchange and then to the Chicago office of France-based Credit Agricole Futures Inc. By the late 1990s, Kloet had moved to ABN AMRO Inc. in Chicago, the U.S. investment-banking arm of Amsterdam-based ABN AMRO Bank NV, as senior managing director. At ABN AMRO, Kloet had responsibility for its global derivatives business and for managing brokerage subsidiaries in Hong Kong, Tokyo and Sydney.

While at ABN AMRO, Kloet acted as board treasurer of the Chicago Mercantile Exchange from 1996 until 2000; he also chaired the CME’s clearing house committee and was vice chairman of the strategic planning committee, which led to the privatization of the CME in 2000. In 2000, Kloet became CEO of the Singapore Stock Exchange. From 2003 to 2008, he headed the Chicago office of brokerage Newedge USA.

Many thought that Luc Bertrand, CEO of the MX at the time of the merger, or one of the interim co-CEOs of the TSX Group Inc., Rik Parkhill and Michael Ptasznik, would be chosen to be CEO of TMX over an outsider. But it was Kloet’s track record in Singapore that landed him the job, according to Wayne Fox, chairman of the TSX Group.

Kloet, with a smile peeking through his thick moustache, shares the secret to his success, both in and outside the workplace: balance. On the weekends, he can be found golfing, playing tennis or spending the day in Niagara-on-the-Lake, Ont. Come Monday morning, Kloet balances on a different kind of teeter-totter — between what he calls a 10-year vision for TMX and the harsh reality that as CEO, he may only be running the organization for one to three years; even though his current plans are to lead the TMX for the long haul.

“It’s a struggle between addressing the real issues that happen every day, but I’m not going to manage the institution just for today,” says Kloet. “I’m going to deal with the issues to build a better marketplace for tomorrow.” IE