The London Stock Exchange (LSE) is locked in merger talks with its German equivalent, and shareholders are set to vote on the deal next week.
To date, executives on both sides have publicly committed to keeping the combined organisation’s HQ in London.
But sources close to the deal have told City A.M. that the location of the holding company is to be debated at a senior level.
An LSE spokesman said: “This is untrue. Both companies have said, and re-confirmed on Friday, that we remain fully committed to the agreed and binding merger terms, and continue the process of obtaining the necessary approvals.”
The news comes after the head of Germany’s financial market regulator Bafin said the HQ could not be based in London after Brexit.
“It is hard to imagine that the most important exchange venue in the Eurozone would be steered from a headquarters outside the EU,” Felix Hufeld said. “There certainly has to be an adjustment here.”
While politicians in Germany have spoken out against the HQ being based in London, it is understood the intervention from Bafin is seen as more significant, even though the body does not itself have the power to block the merger.
The LSE and Deutsche Boerse have previously described the location of the merged headquarters as non-negotiable.
Following the results of the EU referendum, the stock exchanges issued a joint statement saying they remain “fully committed” to the merger.
Mark Field, Conservative MP for the Cities of London and Westminster, told City A.M. there is no need for the headquarters to be moved after the Brexit vote.
“I don’t think there’s anything material that has happened that should [lead] to any change,” he said. “The fact that we’re outside the Eurozone already means nothing materially has changed. It’s a global exchange and will remain so.”
Field added: “Ultimately, it will be for the exchanges to decide where the HQ should be. And I don’t think the Brexit decision, other than in relation to sentiment, has any material impact on the business case for having the HQ in London, which was what was intended before.”