Daily Management Review

Euronext is interested in LSE's clearing business


12/20/2016


European exchange operator Euronext confirmed rumors on exclusive negotiations with London Stock Exchange (LSE) to buy French business of clearing house LCH. The deal could help regulators get approval for LSE - Deutsche Boerse merger, reports Financial Times.



Three months ago, LSE offered to sell LCH SA, formerly known as Clearnet, to allay fears of EU antitrust regulators. The latter reckons that merger with Deutsche Boerse would restrict competition in some segments.

Euronext provides about half of LCH SA’s revenue.

American CME and Nasdaq have also showed interest in LSE, but their interest cooled in recent weeks, told two sources familiar with the negotiations.

London Stock Exchange Group Plc (LSEG) and Deutsche Boerse agreed to merge by exchanging shares in March 2016. Successful completion of the transaction will create Europe's largest securities market operator with a market capitalization of over $ 30 billion.

Euronext NV returned to independent status after the IPO in June 2014. Acquired by NYSE Group in 2007, the company was part of NYSE Euronext since then. In November 2013, the group was acquired by ICE, which then decided to separate Euronext.

Earlier, Deutsche Boerse AG and London Stock Exchange Group Plc (LSEG) received official notification of a claim from the European Commission, acting as the EU's antitrust regulator, about their planned merger to create the largest exchange operator in the region.

Notice of claims is an official document, informs a legal entity of commencement of antitrust investigations against the organization in the EU.

After receiving notification of claims, companies can respond to them in writing or during specially organized hearings within approximately three months. Any action against companies can be taken only after they express their position.

The stock exchanges will continue to cooperate constructively with the European Commission and respond to any issues, say the companies in a joint statement.

European Commission’s investigation will also concern clearing services, merger of which is one of the main reasons for the deal. The, exchanges operators expect to increase efficiency of operations related to derivatives trading. Regulators, however, fear that merger of the exchanges will give them too much control of the market.

source: ft.com






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