The German Stock Exchange and the London Stock Exchange forge a European mega exchange. “We are strengthening the connection between the two leading financial centers in Europe – Frankfurt and London – and build a European network of Luxembourg, Paris and Milan”, German- said Börse CEO Carsten Kengeter when presenting the plans.
in the ranking of the most valuable exchange company to the new company, the date the working name “UK TopCo” would bears, with a combined value of EUR 27.6 billion in second position behind the Chicago Mercantile Exchange (CME) lane. Whether the plan succeeds 2000 and 2005, this time after two unsuccessful attempts over the years, now depends mainly by shareholders and regulators. The “world” answers important questions about the mega project that should provide investors and savers now.
Why wish to merge both?
For exchange operator applies: the more buy and sell orders they can feed their machines, the higher their profits – or the lower the cost per transaction. The cost could be pushed through a successful merger per year to 450 million euros, according to calculations of the two companies. This corresponds to around one fifth of the annual expenses of the corporations.
What have private investors from buying or selling the shares?
the management left open how the savings are passed on in the form of lower fees to customers. Law vague sound the statements that investors better access to products from other countries have to be. “For the small investor, nothing will change,” says Andreas Lang of the German protection combination for security possession (DSW). He sees the transaction primarily as a corporate strategic consideration in order to meet the competition from the United States and Asia on an equal footing. This point was also emphasized by the two partners.
Loses the financial center Frankfurt important?
This is vehemently denied by the initiators. “I can vouch personally that Frankfurt fares well in the merger,” said German stock exchange boss Kengeter. Ultimately, would both locations, Frankfurt and London, not only secured by the new alliance, but even strengthened. Frankfurt about making his international importance loss in trading business betting. “We were once the number one and currently only the number four,” said Kengeter. The new European super market to its legal seat do have in London, but the leaders attach great importance to the finding that remain in its present form under the new holding company, the German Stock Exchange and the London Stock Exchange (LSE) as subsidiaries. A shift of transactions is not provided, so LSE boss Xavier Rolet. The advantages would about the fact that the merged entity will use the respective best IT systems. Taxes should be paid unchanged in the founding countries. In addition, the national supervisory authorities remained responsible.
What critics say?
Some Britons see the planned merger as a hostile takeover of their more than 200 year old market by “the Germans”. After all, the German market is to keep at the end with good 54 percent majority stake in the joint holding. Moreover Kengeter to be head of the new exchange. “There are concerns that the impact over time to Frankfurt could shift,” says Andre Spicer, a finance professor at Cass Business School in London. In Germany, to Moors criticism especially at the registered office in London. “I can relate to that economically,” said Sparkassen-President Georg Fahrenschon. “But I can hardly imagine that we do not have the market for the euro area in the euro area and in the worst case not even in the European Union.” He was referring to the Proposed referendum on United Kingdom membership of the European Union decision in June.
What happens when the British vote on June 23 for the withdrawal from the EU?
from a possible withdrawal from the EU are not willing to be deterred from their plans the partners. “The combined company will be successful regardless of the outcome of the British referendum,” Kengeter said. A Proposed referendum on United Kingdom membership of the European Union could, however, lead to a redistribution of the shops in the new group.
How many jobs are eliminated in Germany?
This is unclear. “It will affect jobs,” said Kengeter only. To what extent these painted or example, moved from Frankfurt to London or to other locations, he left open.
How can fail the merger to?
“the greatest risk of the merger between the London Stock Exchange Group and Deutsche Börse is a regulatory risk, there are risks of competition,” said Owen Jones, an analyst at Citigroup. Some analysts point out that the two new partners could dominate the settlement business (Clearing) in Europe. In addition, there was a predominance in equities trading. Furthermore, it could even lead to a bidding war. The US exchange operator ICE has already announced publicly, to examine its own offer.
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