London Stock Exchange and Deutsche Börse AG Agree to Merge
Commentary by Steven Lofchie
The London Stock Exchange Group and Deutsche Börse AG reached an agreement on the terms of a recommended all-share merger through the establishment of a new UK holding company, UK TopCo.
Commentary
As Professor Pirrong observed in his recent blog post (see Related News), the Dodd-Frank clearing mandate has likely accelerated the merger of exchanges and clearing corporations. In an attempted framework to eliminate the possibility of institutions that are "too big to fail," Dodd-Frank instead has created a new kind of monopoly on an even bigger scale.
Did the regulators anticipate this? If they did, then they didn't let on. If they didn't, then perhaps they should concede that their requirements have not worked out as originally intended (and as were touted).
Related Articles
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University of Houston Finance Professor Craig Pirrong argues that synergies in clearing are pushing the proposed merger between the LSE and Eurex and suggest that consolidation in the industry is "nearly inevitable."
