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European Commission to investigate London Stock Exchange-Deutsche Boerse merger

Plans to merge the London Stock Exchange and Germany’s Deutsche Boerse are being investigated by the European Commission, on the grounds that it could be anti-competitive. The £21 billion merger, which if successful would combine the stock markets of the UK, Germany and Italy into a single company, has become the subject of intense political argument, as opponents fear the combined group would have a monopolistic hegemony over European equities and derivatives trading. 

In response, the LSE has stated that it is considering selling LCH. Clearnet SA, the French division of its in-house clearing house LCH. Clearnet. However, it remains unclear if that will be enough to mollify the European Commision. A previous merger attempt between the LSE and Canada’s TMX Group came unstuck in 2011, after a group of Canadian banks cooperated to outbid the LSE and buy TMX Group outright, thus keeping it under Canadian control. 

The LSE-Deutsche Boerse deal comes amid a global round of exchange consolidation. In March 2016 Nasdaq bought the International Securities exchange from Deutsche Boerse, in a $1.1 billion deal; Deutsche Boerse had originally paid $2.8 billion to acquire ISE in 2007. 

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