Deutsche Boerse chief investigated for insider trading

Carsten Kengeter chief executive of the Frankfurt stock exchange Deutsche Boerse is being investigated by German prosecutors for insider trading ahead of merger talks with the London Stock Exchange (LSE).

Kengeter bought around €4.5m of stock in his own company on 14 December 2015 just two months before the merger announcement in February 2016 shot up share prices by around 11%.

Several prosecutors and civil servants from the Hessen state office of criminal investigation carried out searches at the company’s headquarters and Kenteger’s private apartment in Frankfurt.

The company have said that the purchase was related to its remuneration programme which had an end-of-December deadline. As part of the deal, he received “co-performance shares” to the same amount whose value depends on the company’s profits and its share price movement relative to a benchmark index.

"The accusations are groundless," chairman of Deutsche Boerse's Joachim Faber said.

"Only in the second half of January 2016 did the two chairmen and CEOs agree to begin negotiations for a merger of LSE Group and Deutsche Boerse," the Deutsche Boerse supervisory board chairman added.

The LSE defended its German counterpart saying: “LSE welcomes the strong statement of support by Joachim Faber, chairman of the supervisory board of Deutsche Börse who has described the allegations related to Carsten Kengeter as without foundation. We look forward to working towards completion of our proposed merger.”

The merger between the two stock exchanges would create a financial markets giant, on par with the Chicago Mercantile Exchange and ICE, the operator of the New York stock exchange and the Hong Kong stock exchange.

London hosts roughly €1.3trn of euro clearing transactions every year, which has been put at risk by the UK vote to leave the EU. The deal would therefore also be London’s connection with the Eurozone post Brexit.

There has been much criticism however from France, Belgium, Portugal and the Netherlands, as they fear for their own stock exchanges, owned by Euronext.