The London Stock Exchange Group has today hit back at the suggestion its merger with Deutsche Boerse will lead to Frankfurt snatching a large amount of business from the City.
Research commissioned by the German exchange claimed the deal, which is currently being probed by the European Commission, would enable Deutsche Boerse to move billions of pounds of derivatives trading from the UK.
The report, by Dirk Schiereck, the corporate finance chairman of Technische Universität, said:
Deutsche Boerse has a good chance of winning significant long-term market share in the areas of interest rate and currency trading and of relocating trading from London to Frankfurt if the market participants in London are given unrestricted access to superior trading platforms in Frankfurt.
The London Stock Exchange today noted the “speculation in relation to the possible future location of certain of its businesses as a result of the completion of the merger”.
“For the avoidance of doubt, such action is not contemplated and any statements suggesting otherwise are inaccurate and misguided,” a statement said.
“[T]he existing regulatory framework of all regulated entities will remain unchanged and, in particular, there is no intention to move the locations of Eurex or Clearstream from Frankfurt, LCH from London and the US, Monte Titoli from Milan or CC&G from Rome following completion.”
The report was commissioned, but not written, by Deutsche Boerse. The German exchange published an executive summary explaining why the merger “will strengthen Frankfurt as a financial centre”.
One reason listed is the Brexit vote, “which will make Frankfurt the clear European centre for financial market regulation and simultaneously, Frankfurt might indeed become the European centre for supranational risk management rate and currency transactions, which at present are largely cleared in London”.
Deutsche Boerse, which may face a battle to persuade German regulators that the deal should go through, also said the deal could help the European Central Bank retain “the ability to supervise interest”.