London Stock Exchange, Deutsche Boerse and Euronext on stand-by as they await merger news from Margrethe Vestager and the European Commission

 
William Turvill
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Competition commissioner Margrethe Vestager is expected to block the deal as early as Wednesday (Source: Getty)

The London Stock Exchange, Deutsche Boerse and rivals are on stand-by as they await news from the European Commission on the exchanges’ mega-merger.

Competition commissioner Margrethe Vestager is expected to formally block the deal as early as Wednesday, according to sources close to the deal.

The European Commission block has been on the cards for more than a month, since the London Stock Exchange revealed it was unwilling to divest its Italian trading business MTS.

Read more: MTS and the London Stock Exchange deal: How a straw broke the camel's back

Pan-European exchange Euronext will be paying close attention. As part of the Deutsche Boerse tie-up, the London Stock Exchange had agreed to sell its French clearing house, LCH SA, to Euronext for €510m (£443m).

The London Stock Exchange indicated that this divestment was conditional on the Deutsche Boerse deal completing. But Euronext remains keen on LCH SA, and could use the fact it claims to contribute around half of the clearing house’s revenue as a bargaining tool.

A spokesperson said:

Euronext remains a willing buyer of Clearnet SA in the terms agreed on 3 January but, in the absence of obtaining an agreement, Euronext is fully committed to securing the best long-term solution for its post-trade activities, in the interests of clients and shareholders.

Read more: European Commission expected to block London Stock Exchange deal soon

Elsewhere, Deutsche Boerse is looking to the future and working towards maintaining its London offering after Brexit. Speaking to City A.M. on Tuesday, the German company’s chief regulatory officer, Alexandra Hachmeister, declined to comment on the London Stock Exchange deal.

But on Brexit, she said: “If you look at it from a financial market infrastructure perspective, it is obviously our primary interest to ensure that our UK-base clients maintain access to our infrastructure. This is an important dialogue that we’re having with our customers, how we can support them in the transition period.”

As for the London Stock Exchange’s future, it has been speculated that it could again become a takeover target for US exchanges like ICE and CME.

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