Stock exchange bosses seek to reassure German politicians over London legal HQ

William Turvill
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The London Stock Exchange and Deutsche Boerse agreed a £21bn merger last March (Source: Getty)
ondon Stock Exchange and Deutsche Boerse bosses this week began a push to convince German politicians of the merits of their merger and soothe concerns around the legal headquarters being based in the UK.

Politicians in the State of Hesse, where the German exchange is based, have been made aware that no alterations will be made to the terms of the deal, meaning a legal base in London.

But they have also been assured that Hesse will retain regulatory oversight of the Frankfurt Stock Exchange and Deutsche Boerse’s clearing house, Eurex.

Read more: Euronext boss happy with clearing buy despite deal helping rival merger

The chief executives and chairmen of the London Stock Exchange, Xavier Rolet and Donald Brydon, and Deutsche Boerse, Carsten Kengeter and Joachim Faber, met with Hesse’s Volker Bouffier and Tarek Al-Wazir on Tuesday.

Bouffier is the president minister of the State of Hesse and is considered to be one of the most influential politicians in Germany and a close ally of Chancellor Angela Merkel. Al-Wazir, meanwhile, is the region’s economy minister and the politician ultimately responsible for approving the deal.

After the meeting, state secretary Michael Busser, said:

The representatives of the stock exchanges have explained their positions.

The minister president took the opportunity to inform the participants about the political situation surrounding a possible merger.

The discussion was expressly not part of the formal assessments of the ministry of economic affairs, which, as exchange supervisor, is responsible for the approval of the merger.

Several German politicians and regulators have expressed concerns over the fact the merged exchange group would have its legal headquarters in London.

Shortly after the UK’s Brexit vote, the London location of the HQ was plunged into doubt, with sources close to the deal telling City A.M. a new structure, including a dual-HQ, was being considered. German politicians were also told this was the case.

Read more: Stock exchange hits back at claims UK will lose out to Germany after merger

However, this is no longer understood to be the case and the terms around the legal HQ will not be changed ahead of the deal completing. In theory, this could change after the deal completes.

Asked by CNBC about the London HQ, Deutsche Boerse boss Kengeter said today:

We are talking about a legal seat of the holding company, which is indeed structured to be based in London, and then we are talking about dual-headquarter structure, where London and Frankfurt have operational headquarters and the regulated entities will reside without any change.

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