A Canadian official on Friday balked at the prospect of Dubai increasing its minority stake in a combined London and Toronto Stock Exchange, and possibly seizing control of the "strategic asset."

"We do business with the Middle East," Ontario Finance Minister Dwight Duncan told reporters. "I am just not sure I want them owning our stock exchange."

Canadian media said Mohammed bin Rashid Al Maktoum, the billionaire ruler of Dubai, would hold a 11.3-percent stake in the combined entity, the largest single holding.

The combination "affects our capital markets both in a retail and also capital raising perspective. I am just not going to be one of those that says, 'Okay, go ahead,'" Duncan said.

He called the Toronto Stock Exchange "a strategic asset in a strategic industry."

"If you went to try to buy the Dubai stock exchange, do you think you'd be able to? If you tried to buy a resource-based industry in China do you think you'd be able to?"

The merger would create the world's biggest trading platform that would dominate the raw materials and energy sectors, spanning 20 trading markets and platforms across Europe and North America.

The group, provisionally called LSEG-TMX, would also be the world's largest exchange in terms of the number of companies traded, with a total of more than 6,700 listings.

The deal is expected to be completed in the second half of this year, subject to shareholder and regulatory approvals.