The UK should block any attempt by Germany to shift the headquarters of the London Stock Exchange to Frankfurt after it merges with rival Deutsche Boerse, an MP has said.
Under the terms of the deal to create Europe’s biggest stockmarket, Deutsche Boerse CEO Carsten Kengeter is due to head the combined group, with London the home of the main holding company and its joint board.
However, a number of German politicians have made it clear they want the headquarters to be in Frankfurt if they are to back the €25.8bn transaction, which was agreed before the UK voted in June to leave the EU.
Now political pressure is also rising in the UK. Bill Cash, a British eurosceptic Conservative MP, said keeping the LSE headquartered in London was a matter of national interest and the British government must dig in.
“It’s not a normal commercial operation. This is much more about the acquisition of the crown jewels,” Mr Cash, who chairs the House of Commons’ European scrutiny committee, told Reuters in a telephone interview.
“That’s a matter of national interest. There is no conceivable reason why it can be in our national interest to have it transferred to Frankfurt,” he said.
Mr Cash said he hoped the debate would trigger wider discussion about an issue that has received little attention from the British media or the UK government so far as preparations for divorce talks with the EU hog the headlines.
If the British government were to adapt the position advocated by Mr Cash, it would put London on a collision course with Berlin and potentially torpedo the merger.
The location of what will be Europe’s biggest stock exchange has symbolic and operational significance, with regulators keen for oversight of its derivatives processing business.
Advisers and company executives are divided about whether London’s status as the main headquarters can be changed. the UK’s departure from the EU may isolate London as Europe’s financial centre and that has turned the tables in favour of Frankfurt.
One of the chief concerns for EU regulators is that London-based LCH Clearnet, majority-owned by the London Stock Exchange, clears more than half of all interest rate swaps traded around the world, many of which are in euro.
That means as soon as the UK leaves the EU, the clearing and regulation of euro transactions will be outside the bloc. n Reuters
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