The European Commission has opened an in-depth anti-trust investigation into the proposed EUR24 billion merger between Deutsche Bourse and the London Stock Exchange.
The opening of a full-scale investigation follows a preliminary probe undertaken by the trading bloc's competition watchdog which identified a host of potential problem areas.
In clearing, the Commission identified the potential for the elimination of competition in a number of areas, including bonds, derivatives and repos, alongside adverse affects for competing trading venues reliant on LSE-owned LCH.Clearnet, as well as for post-trade competitors in collateral management, settlement and custody services.
The London exchange operator has responded to the investigation by offering to offload the French arm of LCH.Clearnet as a potential remedy.
Nonetheless, the 90-day probe will also give the Commission more time to further analyse the impact of the transaction on competition in listings, German government bond trading, index licensing, freight derivatives, settlement and custody, IT and regulatory and trade reporting services.
Competition inquiries by the EU and domestic market regulators in the UK and Germany are likely to be further complicated by the implications of the Brexit vote, laden as it is with loaded questions about sovereignty and oversight of the combined entity.