Stock exchange merger with Deutsche Börse close to collapse

LSEG said it considered the MTS remedy as disproportionate and added that it was highly unlikely that such a sale could be satisfactorily achieved, even if it were to give the commitment.

The two exchanges announced plans to merge in a 29 million euro deal just over a year ago, aiming to create a giant trading powerhouse that would better compete against US rivals that were starting to encroach on the pair's turf.

As a result, the London exchange said it's not going to submit a plan to sell MTS in time to meet the Commission's deadline on Monday, making it "unlikely" the regulator will approve the merger.

In a statement published on its website, the exchange operator said that it was asked by the European Union to sell 60% of its MTS government bond trading platform in order to comply with concerns that the €29 billion merger could hamper competition in the region's financial services sector.

A mega-merger designed to create a European stock exchange big enough to compete with USA rivals is now in peril.

The LSE's statement says it will continue to speak to other regulators about the deal, but suggests the company is prepared to see the deal die.

In a separate statement, Deutsche Boerse attributed the decision to LSE alone.

Last month LSE agreed to offload the French arm of clearing house LCH to European rival Euronext, as part of efforts to address EU competition concerns.

Plans to combine the London Stock Exchange with Deutsche Boerse, which runs the main German stock market, have been in the works for more than a year. It said the Commission already rejected one alternative solution proposed by the stock exchanges. The company operates the Borsa Italiana, in addition to the London Stock Exchange.

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