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Deutsche Börse’s chief executive discussed a possible merger with the London Stock Exchange Group, with one of Angela Merkel’s top advisers in November 2015, just weeks before he bought shares in the German group, according to Spiegel magazine.

Frankfurt’s public prosecutor said last week that it was investigating Carsten Kengeter on suspicion of insider trading in relation to his purchase of 60,000 shares in Deutsche Börse on December 14, 2015, as part of a company incentive scheme in which he had been asked to participate by the company’s board.

The prosecutor’s office said that Mr Kengeter was suspected of having bought the shares despite knowing that talks between the leaders of the two exchanges operators about a possible merger had taken place between July and August and December 2015 – which it considered insider information.

Deutsche Börse’s supervisory board rallied to Mr Kengeter’s defence, with chairman Joachim Faber describing the accusations as “untenable”. Deutsche Börse said that it had reviewed its processes in 2015 internally and via external experts, and found that no merger negotiations with the LSE had taken place that year. Formal talks between Deutsche Börse and the LSE began in the second half of January 2016.

However, in an article on Friday, Spiegel said that Mr Kengeter had had a conversation in November 2015 with Lars-Hendrik Röller, one of German chancellor Ms Merkel’s top economic aides, in which he told Mr Röller that Deutsche Börse and the LSE were “in principle agreed” on a merger.

Deutsche Börse declined to comment as the matter was under investigation. A government spokesman said that Mr Röller “has many conversations with business figures as part of his job. However, we never comment on specific appointments”.

Mr Kengeter still holds the shares and is barred from divesting them until 2019.

Separately European antitrust authorities probing the merger have sent out questionnaires to test market reaction to the exchanges’ remedy to competition concerns, according to two people who have viewed the document.

The two have offered to sell the LSE’s French clearing arm LCH SA and the LSE already has a buyer, having agreed a €510m deal with Euronext, its Paris-based rival, last month. Among more than 30 questions the questionnaire is asking include ones asking whether LCH SA is “currently sufficiently autonomous from an operational point of view so it can operate on a standalone basis”, and whether “from a general point of view, the scale, size and scope sufficient for the divesment business can effectively compete” in markets such as clearing of German bonds, according to two people who have seen the paper. The EU, Deutsche Borse and the LSE all declined to comment.

EU officials have also asked whether the combination would be dominant in the European cleared repo market. One segment, the general collateral triparty cleared repo market, would be particularly affected. Deutsche Börse’s GC Pooling product, backed by the Bundesbank, is the main rival to LCH’s €GCPlus, which gives access to the Banque de France. In the tri-party cleared repo market, the clearing house sits between large banks as they swap their collateral from short-term loans.

The questionnaire also asks whether trademarks are important in the clearing market to attract business, and whether some personnel at the LCH parent group should be included within the scope to ensure the business is viable and competitive. The formal offer will delay the deadline for the commission’s decision by 15 working days. It must decide by April 3.

Copyright The Financial Times Limited 2017. All rights reserved.
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