For the rest of us that aren't invested in the deal, its potential collapse is not entirely unwelcome. As I have also previously written, while the consolidation of stock exchanges over the years at first helped to make buying securities easier and cheaper, it has passed the point where further scale is likely to offer much genuine benefit to end customers. Such is the dominance of the large exchange groups in certain areas that they can effectively set their price - hence the EU regulator's insistence that certain divisions must be offloaded for the deal to be given the green light.
One area where we have heard numerous complaints - but which does not yet appear to have faced much scrutiny from competition authorities - is around its FTSE Russell index businesses. This dull-sounding division is in fact hugely critical for anyone providing financial information (as we do) or building tracker products, because to use this data you must pay a fee to the index owner.
That in itself is fair enough - it takes work to manage the vast array of indices are on offer. The problem is that the most commonly used indices are already concentrated in the hands of a few vast providers - following its tie up with Russell Investments in 2014, the LSE now has around $10tr of assets indexed to its products. And that means it can set its price: if you want to build a FTSE tracker, you pay what they ask - and, so goes the gripe, whatever the LSE feels like charging on the day, because the pricing structure are somewhat opaque. The merger would have further cemented that dominance, consolidating all Dax and, more importantly, Stoxx indices which are the bedrock of European passive industry.
Given that passive investments are already much lower cost than their active counterparts, you may ask why this matters. But according to Kate Beioley - who has been researching this subject in some detail for a forthcoming longer article - index license fees account for a big chunk of their costs, and so passive vehicles could be even cheaper if the stranglehold on index provision was broken. And because costs are the enemy of returns, it's worth fighting for every basis point and against further consolidation of this industry.
