
The year 2012 saw the Deutsche B?rse call off an effort to merge with the New York Stock Exchange (NYSE) after European antitrust regulators formally opposed the deal. Now Germany is set to try such a deal once more ? this time with the London Stock Exchange (LSE).
Deutsche B?rse and LSE have a history dating back to 2000, when the first attempt to merge ran into resistance from LSE shareholders who had concerns about how the combined exchange would be regulated. Deutsche B?rse returned in 2004 with a $2.5bn offer, but abandoned its plans following opposition from its own shareholders. The timing of its latest efforts, however, has been of much debate. But the news arguably couldn’t have come at better time ? a few days after prime minister David Cameron returned from Brussels with an agreed set of reforms designed to keep Britain in the EU. This included securing a commitment to exempt Britain from “ever closer union” ? to be written into the treaties ? and a four-year “emergency brake” on in-work benefits. But while the prospect of Brexit heightens volatility in the UK, Germany’s chancellor Angela Merkel has said she wants the UK to stay in the EU. That hasn’t stopped her from warning that businesses are quietly preparing for the possibility that it would leave and that the possible merger of the two stock exchanges should be seen as such. According to the Financial Times, the two stock exchanges combined would be able to help customers cut the costs of trading derivatives by allowing them to post less collateral than they normally would. This was also highlighted in a statement about the merger, where the two exchanges said: “LSE and Deutsche Boerse believe the potential merger would offer the prospect of enhanced growth, significant customer? benefits including cross-margining between listed and OTC derivatives clearing, as well as substantial revenue and cost synergies and increased shareholder value.” Furthermore, if the deal were to go ahead it would create a clear market leader for?Europe, making it one of the largest exchanges in the world for trading and risk managing derivatives. It is the latter point that has boosted talk of the stock exchange merger. Read more about the London Stock Exchange:- How to make an Initial Public Offering on the London Stock Exchange in 10 steps
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