The London Stock Exchange (LSE) moved one step closer to its £21bn mega-merger with German exchange Deutsche Boerse yesterday, formally submitting concessions to competition regulators in Brussels.
The offer goes little beyond the LSE’s sale of its French clearing unit LCH SA to Euronext. However, both exchanges are confident the submission will be enough to satisfy the European Commission.
The commission will now market test this proposed remedy and the exchanges said its review timetable has been extended again to 3 April.
With the exchanges confident of winning Brussels approval, thoughts will turn to the state of Hesse, which also has the power to block the deal.
Several politicians in the region, where Deutsche Boerse is based in Frankfurt, have spoken out against the merger and are particularly unhappy that the legal headquarters of the joint entity will be in London.
Sources close to the deal have told City A.M. the HQ cannot be moved before the deal completes but that the exchanges may need to offer more to the state of Hesse in order to win its backing.
Despite confidence at the top of both bourses, not everyone is so sure the deal will still go through. "We continue to estimate only around a 50 per cent chance of the deal closing as we believe the EC is still likely to be concerned that the merger will lessen competition in EU derivatives clearing," said Credit Suisse in a note yesterday.
"In particular, we think the deal could be interpreted as inconsistent with the spirit of the MIFID2 open access clauses, which have been designed explicitly to promote competition between EU derivatives market infrastructure providers."