London Stock Exchange said its proposed merger with Deutsche Boerse AG was unlikely to be approved by the European Commission, leaving the market operators’ third attempt at combining on the brink of failure.
The commission has ordered the LSE to sell its 60% stake in MTS, a fixed-income trading platform. This is to satisfy antitrust concerns over the merger of Europe’s two largest market operators.
Calling the request “disproportionate,” the LSE said it believed that it would struggle to sell MTS and that such a sale would be detrimental to its ongoing business. The exchange added that it would still work to make the merger with Deutsche Boerse succeed, but that would be impossible unless the commission changed its position.
The two rival exchanges announced plans for a "merger of equals" about a year ago, aiming to create a giant trading powerhouse that would better compete against US rivals.
They had already agreed to sell part of LSE's clearing business, LCH, to satisfy competition concerns before the commission's surprise demand concerning MTS earlier this month.
The Commission had given the exchanges until Monday to come up with a proposal to meet that demand.
LSE said that such a sale would need regulatory approval from several European governments and would hurt its wider Italian business.
"Taking all relevant factors into account, and acting in the best interests of shareholders, the LSE Board today concluded that it could not commit to the divestment of MTS," the exchange said.
Deutsche Boerse said on Sunday night that it and the LSE would await a further assessment by the European Commission, which was expected to make a decision by the end of March.