A German member of parliament told City A.M. that the merged company could "under no circumstances" be based in the London rather than Frankfurt if the UK votes for a so-called Brexit.
Ulrich Caspar, a member of parliament for the ruling Christian Democrats in the state of Hesse, where Frankfurt is located, said he does does “know of any significant politician in Germany” who could imagine seeing the deal go ahead under the current conditions.
Under the proposed merger, announced last month, Deutsche Boerse shareholders would own 54.4 per cent of the new company, which would be led by the German company's current chief executive, Carsten Kengeter.
The LSE's chief executive Xavier Rolet would make way, but the company would be based in London.
Asked what impact he believes a British vote to leave the EU would have on the deal, Caspar said: “The status today is already that according to the merger plans with London the stock market holding would sit outside the eurozone, which would be very problematic.
“I believe that if the exit from the EU occurs, the merger with seat in Great Britain would under no circumstances be possible anymore.
"This is due to the legal systems then evolving further apart from each other, rather than developing together.”
Asked generally how much opposition there is to the deal in Germany, Caspar added: “I don't know of any significant politician in Germany who can imagine the merger under these conditions.”
Read more: London Stock Exchange battle heats up
Caspar also said that in Germany stock exchanges are "public institutions". He added: “Therefore, from a political view, it is essential that it operates under regulatory supervision, which in this case is by the State of Hesse.
"It is of course also important that the stock exchange has the possibility to develop itself from a business perspective."
But Caspar suggested that "possibilities of supervision and the development [are put] at risk" by the fact the merged company would be based in London and that the chairman of the board of directors would come from the LSE side.
Meanwhile, eurospectic Tory MP Sir Bill Cash today hit back at German politicians calling for the merged company to be based in Frankfurt.
He told the Daily Mail: "The Germans want to run not only the eurozone but also the EU as a whole. There is no limit to their desire to take over institutions like the stock exchange.”
Cash also called on business secretary Sajid Javid to block the deal, and added: “Frankfurt has never shown any capacity for the flexibility and entrepreneurship which the London Stock Exchange represents.”