London Stock Exchange Group Plc (LON:LSE) investors are not worried about the setback the company received in respect of a merger with Deutsche Boerse. The stock is trading up more than three percent indicating that they welcomed the decision of the regulator. The move assumed significance in the wake of Brexit process that is set to commence.
Antitrust regulator in European Union has vetoed the planned merger between London Stock Exchange and Deutsche Boerse for about Euro 29 billion or $31.3 billion. As a result, the attempt to establish a biggest stock exchange in the European Union has failed to fructity.
The regulator blamed the two exchanges for not providing enough concessions to dispel its concerns of a merger. The regulator said that the planned merger would have established a defacto monopoly for clearing fixed income markets, Reuters reported.
In its order, the European Competition Commission disclosed that the failure of the parties to address its concerns have forced it to prohibit the planned merger. The regulator could not make out that the sale offer of London Stock Exchange’s clearing house, LCH Clearnet to Euronext would have established a meaningful competitor in the markets.
On the other hand, the Commission felt that divesting MTS Italian trading platform of London Stock Exchange would have dispelled its fears of concerns on competitive environment. However, it was not acceptable to LSE.
In a statement, LSE said, “LSEG believes the proposed merger with Deutsche Börse in combination with the LCH SA remedy would have preserved credible and robust competition in all markets. This was an opportunity to create a world leading market infrastructure group anchored in Europe, which would have supported Europe’s 23 million SMEs and the development of a deeper Capital Markets Union. LSEG looks forward to reviewing the detailed Commission decision to be published under Article 8(3) Regulation (EC) 139/2004 in due course.”
At time of writing this, LSE group shares are trading up 2.8 percent.