With the impending event of Brexit, many uncertainties exist. The London Stock Exchange and Deutsche Borse, since 2000, have tried to merge three times. They hope to create a influential European stock market to compete with their American counterparts. On Wednesday, the European Commission blocked the deal with the leader of the commission, Margarethe Vestager citing concerns of a monopoly as reason for the block. Another problem with the merger was its planned location in London despite the uncertain trade relationship between Britain and the rest of the EU.
The announcement was highly anticipated but it did not come as a surprise. Critics of the decision say an opportunity to harness European economic power has been missed, but supporters of the decision point out uncertainty in the market over Great Britain's looming exit. The European Commission stands by its decision asserting that it would have created a monopoly in the clearing of bonds and other European fixed income products as well as removing horizontal competition for the clearing of single-stock equity derivatives. This decision will probably be the first in many decision made in light of Britain's exit from the European Union.
Source: NY Times, March 30, Chad Bray
2 comments:
This outcome did not surprise me at all. It seems almost expected that the countries that host the European stock exchange actually be part of the EU. This is the first of many setbacks London will face, especially with so much uncertainty on how the markets will change. FTSE 100 dropped yesterday in response to the official start of Brexit.
I agree with Elise. Yesterday Theresa May started the official Brexit process, and many news sources are calling the entire process a "divorce." I expect many elements of the European economy will be subject to contention; the third failed unification of the London Stock Exchange and Deutsche Boerse is just the beginning. A potential unification between the two would undoubtedly have some benefits for certain European firms, but any kind of monopoly between Britain and Germany is a frightening prospect, particularly for the remaining EU members. I think Brexit will open up many new opportunities for economic change, although whether they will be enacted is another matter entirely.
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