The London Stock Exchange has tried to downplay a report by Deutsche Börse that claimed the €25 billion merger of the two financial market operators could allow Frankfurt to grab business from the City.
In an extraordinary move, the LSE issued a formal statement yesterday denying that it had plans to relocate operations to Frankfurt if the tie-up went ahead, saying that “such action is not contemplated”.
Its assurance came after The Times published an article on Monday reporting on a study commissioned by Deutsche Börse that highlighted how the merger of the exchanges could strengthen Frankfurt as a financial centre.
In the report, published on Deutsche Börse’s website, Dirk Schiereck, chairman of corporate finance at Technische Universität Darmstadt, detailed how Frankfurt could benefit from the deal. “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,” Professor Schiereck wrote in his 33-page report.
The report, Why the merger between Deutsche Börse and the London Stock Exchange will strengthen Frankfurt as a financial centre, also makes the case that the deal could allow Germany to repeat its 1990s coup of luring trading of the Bund, the German government bond, from London to Frankfurt.
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Reacting to the report, the London Stock Exchange said that none of its businesses would move to Frankfurt. “Such action is not contemplated and any statements suggesting otherwise are inaccurate and misguided,” it said. “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.”
Senior continental politicians have said that euro-denominated processing of financial transactions must leave Britain because of the vote to leave the European Union.
Frankfurt, along with other European cities, is trying to position itself as the natural home for any business forced out of London.
Simon Kirby, economic secretary to the Treasury, said yesterday that leaving the European Union did not have to mean that clearing had to move. “It’s in Europe’s interest that London retains euro clearing . . . If you dismantle it, then you redistribute euro clearing, then it might end up in New York and then that’s not in anyone’s interest at all for that to happen,” he said.