LSE, Deutsche Börse offer sale of French clearing arm as antitrust remedy

Deutsche Börse and the London Stock Exchange Group have submitted the sale of the LSE’s French clearing arm as their sole remedy to European antitrust authorities to clinch approval from Brussels for their planned €29bn merger.

The offer, confirmed in a statement late on Monday evening by Deutsche Borse, came on the last day of the permitted time frame for both sides to offer a remedy to antitrust concerns.

Brussels’s tough scrutiny is only one hurdle the two exchanges must overcome in their bid to create Europe’s largest exchanges operator. The deal has been complicated by the UK’s decision to leave the EU, with German regulators and politicians unhappy about the prospect of the merged group’s holding company being located outside the union. The heads of both exchanges have resisted calls for the deal terms to be changed.

Carsten Kengeter, chief executive of Deutsche Börse, told the Financial Times six weeks ago that the remedy package would be “crucial” to seeking the EU’s approval. “We believe that the vast majority of the concerns that are coming out of Brussels will, in fact, be addressed by [the sale of LCH SA],” he said.

LCH SA clears derivatives, equities and repo trades, although not interest rate derivatives that are central to the deal. The LSE already has a buyer for the business, having agreed a €510m deal with Euronext, its Paris-based rival, at the start of January.

European authorities will now be able to analyse the remedies and test them with other affected market participants, and are due to make a decision by March 13. The formal offer of remedies is likely to “stop the clock” on the European Commission’s decision for around 10-15 working days.