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Report: EU says LSE-Deutsche merger to oust competition in clearing services

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Report: EU says LSE-Deutsche merger to oust competition in clearing services

The merger between London Stock Exchange Group Plc and Deutsche Börse AG will phase out competition in the clearing services industry as it involves two direct rivals joining forces, according to EU regulators, Bloomberg News reported Jan. 20, citing "two people who've seen the EU's statement of objections."

The European Commission raised a few issues regarding the merger in a document sent to Deutsche Börse and LSE in December 2016, including a point that the merger will further strengthen derivatives trading, but will give the two companies bothersome control over prices. The document reportedly contained fewer issues compared to when an in-depth investigation was opened into the merger by the EC in September 2016.

"It feels like the sale of the French unit was supposed to be the answer to the clearing question mark. Now, the EU saying 'No, that's enough' makes you wonder if this is more than just a little speed bump," the report added, citing Ben Kelly, a risk-arbitrage analyst at Louis Capital Markets in London.

The two exchange operators can pass the hurdles through concessions like asset sales and vows to work in a certain manner. A concession offer has not yet been made by the exchange operators, but is likely to be made in a few weeks.