Bloomberg News

U.K. Antitrust Regulator Delays Review of LSE-LCH Merger

October 03, 2012

The U.K. Office of Fair Trading has suspended the timetable for its review of London Stock Exchange Group Plc (LSE)’s acquisition of a majority stake in LCH.Clearnet Group Ltd. as the companies try to close the deal by year-end.

The regulator had originally said it will make a decision by Oct. 31 and yesterday amended the expected ruling date on its website to “TBC,” Frank Shepherd, a spokesman for the OFT in London, said by phone, without giving a reason for the delay.

LSE is seeking to convince regulators that the 463 million- euro ($598 million) acquisition of a stake in LCH.Clearnet, Europe’s biggest clearinghouse, won’t stifle competition. LSE owns clearing and settlement units Cassa di Compensazione & Garanzia and Monte Titoli SpA, which it acquired with its 2007 purchase of Borsa Italiana SpA. The European Commission blocked Deutsche Boerse AG (DB1)’s takeover of NYSE Euronext in February over competition concerns.

LSE sank the most in three years on Sept. 28 after saying European Union regulations will cut income at its Italian central counterparty and may require LCH.Clearnet to boost capital. LCH.Clearnet said it will need to boost capital by 300 million euros to 375 million euros to comply with the rules.

Equiduct Systems Ltd., the European trading system owned by Citadel LLC and Knight Capital Group Inc. (KCG:US), in July told U.K. antitrust regulators that the combination of LSE and LCH would stifle competition. The OFT should impose remedies before approving any transaction and ensure access to the clearinghouse is maintained, Equiduct Chief Executive Officer Peter Randall wrote in a letter to the regulator obtained by Bloomberg News.

The deal is also being examined by Portuguese regulators and has been cleared by Spanish authorities.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Anthony Aarons in London at aaarons@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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