LSE Deutsche Börse

Brexit Stirs Doubts on Stock Exchange Merger

  • Why it matters

    Why it matters

    Britain’s Brexit vote has cast doubt on the planned merger between the London Stock Exchange as it exists now, with calls for it to be based not in London as planned, but in Frankfurt.

  • Facts


    • Britain voted to leave the European Union in a referendum on Thursday, causing turmoil in financial markets and casting doubt on the future of the E.U.
    • The managements of the London Stock Exchange and Deutsche Börse issued a statement on Friday that their planned merger was on track despite Brexit.
    • The vote will likely fan calls for the merged super-stock exchange to be domiciled in Frankfurt rather than London.
  • Audio


  • Pdf

Deutsche Boerse börse headquarters in Eschborn near Frankfurt Source Arne Dedert dpa
Deutsche Börse could see its merger with LSE thwarted by the U.S.-based ICE. Source: Arne Dedert, DPA

Deutsche Börse Headquarters in Eschborn, near Frankfurt. Source: DPA


For better, for worse, in sickness and in health: The stock exchanges in London and Frankfurt issued a joint statement Friday that they still plan to marry even though Great Britain is leaving the European Union. The management boards of both companies are “convinced that the outcome of the referendum will have no influence on the basic strategic idea behind the merger,” the statement said.

“We are convinced that, because of the referendum results, the intended merger has acquired even more importance for our customers,” said the supervisory board chief of  Deutsche Börse, Joachim Faber.

Deutsche Börse and LSE intend to form a European super-stock-exchange which, in terms of its market capitalization, could play in the same league as its two U.S. rivals, ICE and CME. At a special general meeting on July 4, the shareholders of the London Stock Exchange are scheduled to vote on the merger plans. Stockholders of Deutsche Börse have until July 12 to make a decision.

The two exchanges agreed in March to merge in a $30 billion deal to create a European super-stock exchange domiciled in Britain with headquarters in both London and Frankfurt.

However, the outcome of Thursday’s referendum is likely to strengthen calls for it to be based in Frankfurt. Renewed negotiations on this point can be expected. Both companies have set up referendum committees tasked with negotiations regarding the legal domicile. “The committee is examining and discussing all relevant issues,” the chief executive of Deutsche Börse, Carsten Kengeter, told Handelsblatt.

Mr. Kengeter had already warned before the vote that a Brexit could re-open questions about the stock exchange’s headquarters, in an interview with Handelsblatt.

Now, the works council of Deutsche Börse is already calling for the domicile to be in Frankfurt, according to an information sheet obtained by the German business weekly, WirtschaftsWoche. The document states that this is the only way a European stock-exchange champion can be created after the merger; any location other than Frankfurt is said to be out of the question.

Already before the referendum, politicians and regulators had made it clear that the headquarters of the new super-stock-exchange couldn’t be located outside the E.U.

“If circumstances change because of the British vote, the merger decision – particularly regarding the legal seat of the holding company – must be scrutinized,” said the spokesman on financial policy for Germany’s Social Democratic Party (SPD), Lothar Binding.

The head of the SPD’s parliamentary group in Hesse, Thorsten Schäfer-Gümbel, put it more bluntly on Twitter: As of today, the existing merger plans are dead and gone.


Michael Brächer is a financial editor in the investment team in Frankfurt. To contact the author:

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!