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LSE/Deutsche Börse merger crumbling

European regulators have requested the sale of another business to satisfy competition demands
March 2, 2017

London Stock Exchange Group 's (LSE) all-share merger with Deutsche Börse is in trouble. The European Commission has raised fresh concerns over whether the sale of its France-based clearing house LCH SA is enough to ensure market competition. The European antitrust regulator has proposed LSE instead divest of its majority stake in Italy-based repo and bond trading house MTS, in what management said was a "disproportionate" remedy.

IC TIP: Hold at 3103p

The regulator's concerns centre on access to bond and repo trading feeds, provided by MTS. LSE said that while MTS is not a major contributor to group revenue, it is "a systemically important" regulated business in Italy due to its significant role in the trading of domestic government bonds and other securities. Italy overall is an important contributor to the group's sales and profitability, management added.

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