About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Go West, Old Exchange!

Subscribe to our newsletter

Following the EU’s block of the London Stock Exchange merger with Deutsche Boerse, LSE could consider North American suitors with lower regulatory hurdles

By: Jim Northey, Principal Services Consultant, Itiviti

Coming as no surprise on the same day as the letter invoking Article 50 to separate the UK from the European Union, the EU on March 29 blocked the all but forgone merger between the London Stock Exchange Group and Deutsche Boerse.

The proposed merger was an unwieldy deal from the start. There were considerable questions regarding how the two companies with highly distinct operations, technological implementations, and cultures could be merged together to provide economies of scale and synergies required by shareholders. In many ways, the deal became the ultimate tale of bad timing. Due to the tsunamis of MiFID II deadlines, Brexit, and the election of Donald Trump, a deal often categorised by industry pundits as an act of desperation, came to a halt in Brussels.

Both the European Securities and Markets Authority (ESMA) and the Financial Conduct Authority (FCA) in the UK are holding to their statement that Brexit will have no impact on the applicability of MiFID II nor its January 3, 2018 effective date. One has to wonder if the political negotiations that will go on for two years will undermine the mandate behind MiFID II and the unity presented by ESMA and the FCA. One would expect that the threat (or opportunity) of regulatory arbitrage will be employed during the Brexit negotiations. The Deutsche Boerse will be relatively immune to this wrangling.

However, the LSE Group, in the presence of disparate, and possibly even conflicting regulatory regimes in the future, may be faced with excessive costs of multiple regulatory regimes. One wonders if the LSE may look west for a US or Canadian suitor, in light of the CBOE-BATS merger. One would think that after the successful digestion of the NYSE and Interactive Data Corporation (IDC) that the Intercontinental Exchange (ICE) would be a leading candidate yet again. One gets the idea that the courtship of the LSE will continue as it has for nearly 20 years. With President Trump, Brexit, and a resolute EU, regulatory arbitrage opportunities will be the area to watch.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Sponsored by FundGuard: NAV Resilience Under DORA, A Year of Lessons Learned

The EU’s Digital Operational Resilience Act (DORA) came into force a year ago, and is reshaping how asset managers, asset owners and fund service providers think about operational risk. While DORA’s focus is squarely on ICT resilience and third-party dependencies, its implications extend deep into core operational processes that are critical to market integrity, investor...

BLOG

From CFDs to Options: The Prop Sector’s Hardest Migration Yet?

The retail-facing prop trading sector – the funded account model that grew up around FX/CFD and futures trading platforms – spent 2024 in crisis. After a shakeout that wiped out an estimated 80 to 100 firms globally, the survivors have spent the past two years diversifying, first into futures, and now into exchange-traded options. The...

EVENT

RepRisk Sustainability Breakfast Roundtable London

The London sustainability breakfast is part of the global roundtable thought leadership event series hosted by RepRisk in key markets, including, New York, Toronto, London, Frankfurt, Oslo, Copenhagen, Stockholm, Hong Kong and Singapore in 2026.

GUIDE

Directory of MiFID II Electronic Trading Venues 2018

The inaugural edition of A-Team Group’s Directory of MiFID II Electronic Trading Venues 2018 offers a guide to the European landscape resulting from new market structure introduced by the January 3, 2018 implementation of Markets in Financial Instruments Directive II (MiFID II). The directory provides detailed profiles of more than 70 venue operators and their...