The 29bn euro (£24.5bn) merger of the London Inventory Change and Deutsche Boerse might collapse after the LSE mentioned the deal was unlikely to be authorised by the European Fee.
The fee had ordered the LSE to promote its 60% stake in MTS, a fixed-income buying and selling platform.
Nevertheless, the LSE mentioned the request was “disproportionate”.
It warned traders it might wrestle to promote MTS and that such a sale would hurt its ongoing enterprise.
Consequently, the LSE mentioned: “Based mostly on the fee’s present place, LSE believes that the fee is unlikely to offer clearance for the merger.”
The 2 rival exchanges introduced plans for a “merger of equals” a few yr in the past, aiming to create a large buying and selling powerhouse that will higher compete towards US rivals.
That they had already agreed to promote a part of LSE’s clearing enterprise, LCH, to fulfill competitors issues earlier than the fee’s shock demand regarding MTS earlier this month.
The Fee had given the exchanges till Monday to provide you with a proposal to fulfill that demand.
LSE mentioned that such a sale would wish regulatory approval from a number of European governments and would damage its wider Italian enterprise.
“Taking all related elements into consideration, and performing in the perfect pursuits of shareholders, the LSE Board right this moment concluded that it couldn’t decide to the divestment of MTS,” the change said on Sunday night.
MTS is a comparatively small a part of LSE’s enterprise, however it’s a main platform for buying and selling European authorities bonds, notably in Italy, the place it’s labeled as a “systemically essential regulated enterprise”.
The LSE group additionally owns the Milan-based Borsa Italiana.
The LSE mentioned it remained satisfied in regards to the deserves of a merger, however becoming a member of forces with Deutsche Boerse can be unimaginable except the fee modified its stance.
The European Fee and Deutsche Boerse each declined to remark.