LSE refutes reports of multi-billion Deutche Borse trade grab

Denying some media reports on Monday, the London Stock Exchange has stressed that as part of its agreed merger with Deutsche Börse it will not move its clearing business from London to Frankfurt.

Research commissioned by Deutsche Börse claimed the merger will give the German exchange the opportunity to relocate a sizeable chunk of derivatives trading from the UK to Germany, which the Times called a "huge grab of business by Frankfurt".

In his report, Professor Dirk Schiereck, chair of corporate finance at Technische Universität Darmstadt, said: “Deutsche Börse has a good chance of winning significant long-term market share in the areas of interest rate and currency trading and relocating trading from London to Frankfurt if the market participants in London are given unrestricted access to superior trading platforms in Frankfurt.”

In an announcement mid-morning on Monday, the LSE responded that "such action is not contemplated and any statements suggesting otherwise are inaccurate and misguided".

LSE reiterated that, as it stated in last June, the two exchanges are "committed to maintaining the strengths and capabilities of their respective operations in London and Frankfurt" and that the existing regulatory framework of all regulated entities "will remain unchanged".

"In particular, there is no intention to move the locations of Eurex or Clearstream from Frankfurt, LCH from London and the US, Monte Titoli from Milan or CC&G from Rome following completion," the UK exchange said.

Professor Schiereck placed great emphasis on the history of trade moving from London to Frankfurt, notably the luring of bund trading to Germany in the 1990s, saying the proposed merger "could even offer the prospect of structural change" in London's large market for over-the-counter interest rate risk and currency risk.