LSE shareholders approve Deutsche Börse deal

Pedestrians pass the entrance to the London Stock Exchange in central london on June 27, 2016

Getty Images

Shareholders controlling 77% of LSE shares voted overwhelmingly (99.9%) to support the deal at a special meeting at the offices of law firm Freshfields Bruckhaus Deringer in the City of London on July 4.

The shareholder meeting was led by Donald Brydon, the LSE’s chairman, who said the exchange group’s board was “unanimously in favour of the merger”.

The LSE’s investors were largely expected to approve the deal and the focus will now shift to the same vote at Deutsche Börse, which is holding a postal ballot for its shareholders that ends on July 12.

But even if both sets of shareholders end up giving the merger the green light, it must still clear sizable hurdles if it is to complete. The UK’s June 23 vote to end its membership of the European Union has not helped matters.

BaFin, Germany’s main financial regulator, is opposed to terms of the deal that place the combined group’s headquarters in London. Felix Hufeld, Bafin’s president, said on June 28 that “without doubt… it is hard to imagine that the most important exchange venue in the eurozone would be steered from a headquarters outside the EU”.

“There certainly has to be an adjustment here,” he added.

BaFin is one of 20 regulators – others being as far afield as the US, Russia and Singapore – that needs to approve the deal, though it does not have the power of veto.

That rests with the finance ministry of Hesse, one of the German federal regulators that oversees Deutsche Börse. Tarek Al-Wazir, the Hessian economic minister for the Green Party, said in videos posted on his Facebook page the day after the UK’s referendum: “Brexit is a bad decision, a bad decision for Europe, for Germany and Hesse, but also for the UK.”

When asked by one individual shareholder at the July 4 vote about antitrust and political approvals, Brydon said the exchange was “engaged in the process” and added “we’re confident we’ll pass satisfactorily”.

Xavier Rolet, the LSE’s chief executive, added that the group had, over the past six or seven years, built up into a “globally competitive group” and said the LSE was “exceedingly well-positioned regardless of the outcome” of the merger.

In a statement on July 4 accompanying the final shareholder result, the LSE said that the work of a joint referendum committee – set up by the two exchange firms to make recommendations to the combined group’s board in response to the outcome of the UK vote – “may take many months to complete”.

“Whether the UK is just European or a member of the EU, the merger will create a globally competitive, industry-defining market infrastructure group at the service of European industry”, the statement read.

Brydon also said that comments by French president Francoise Hollande on June 28 that euro-denominated clearing should be forced into the eurozone were a “measure of the valuable assets we have”.

The LSE has a majority stake in clearing house LCH.Clearnet, which clears a large amount of euro trades from London – thought it does operate a clearing house in Paris.

Brydon said “some were already picking over the bones of the UK very rapidly indeed”, following the Brexit vote, and that the LSE would “work through those issues” as they arise. Brydon added: “We’re still in the EU…for another two years at least.”

More from Market Infrastructure

Let’s block ads! (Why?)

Trading & Technology – Financial News Online

You May Also Like