The European Commission blocked the merger of two major European stock exchanges Deutsche Boerse (German stock exchange) with headquarters in Frankfurt am Main and the London Stock Exchange (LSE). Recall that in the spring of 2016 the exchange agreed to merge by exchanging shares. If the merger took place, in Europe there would be a new exchange with a market capitalization of about $ 30 billion, which would have ranked third in the world by market capitalization after the New York and Tokyo stock exchanges. The main argument of the European Commission is the need to protect competition stock market operators in Europe, as the EU antitrust authorities fear monopolization of clearing in the EU, especially for transactions in debt securities.
The reasons for the merger of the two exchanges, the need for which the leaders of both trade organizers claimed even ten years ago, there were many. First of all, it was an attempt in London to position itself in the EU as a pan-European financial center and at the same time one of the world's financial centers. In addition, as an argument for the merger has been added and the economic crisis in Europe and around the world, which led to a sharp reduction in the volume of primary placements of securities on the stock exchanges. In particular, in 2016 in Europe, the number of IPO halved. Thus, it was also an attempt to maintain a stable financial results. However, after the referendum on the European Union has Brexit, previously more loyal to the possibility of combining the major European stock exchanges, some apprehension caused a possible strengthening of one of the UK's largest financial institutions in continental Europe.
We believe that the merger of the two exchanges is now and will not take place. In turn, the two exchanges can begin active work to attract clients from Russia and other BRICS countries on the initial public offering. It is possible that the exchange may have some pressure on their national governments in the cancellation of anti-Russian sanctions, although their lobbying efforts, we estimate modestly. In any case, the news is positive, rather, for the shares of the Moscow Stock Exchange, which in the near future does not appear a major competitor for the placement of securities of Russian issuers.
According to the materials of Alpari
