European Commission opens investigation into acquisition of Refinitiv by London Stock Exchange

Maria Nikolova

The Commission is concerned that the proposed acquisition may reduce competition in trading and clearing of various financial instruments and in financial data products.

The European Commission today announced the launch of an in-depth investigation into the proposed acquisition of Refinitiv by the London Stock Exchange Group (LSEG). The Commission is concerned that the proposed acquisition may reduce competition in trading and clearing of various financial instruments and in financial data products.

The proposed transaction combines major trading venues where electronic trading of bonds of the European Economic Area (EEA), UK, and Swiss governments takes place. These venues include LSEG’s MTS and Refinitiv’s Tradeweb. This would result in a very large combined market share in the electronic trading of European Government Bonds, the Commission says. The market investigation indicates that the parties own venues with a leading position in the market, and are close competitors in this space, in particular regarding trading between dealers and investors. The market investigation also suggests that it is difficult for a new trading venue to attract clients in sufficient numbers and become a real alternative to incumbent venues.

Regarding the trading and clearing of over-the-counter interest-rate derivatives (“OTC IRDs”), the proposed transaction would create a combined entity with significant market power both upstream (trading) and downstream (clearing), the Commission says.

The preliminary investigation shows that barriers to entry are high and customers rarely switch trading venues or clearing houses. The Commission will also investigate further the competitive dynamics in trading and clearing of exchange-traded funds and foreign exchange instruments.

Furthermore, the Commission has preliminary concerns that following the proposed transaction, competitors in consolidated real-time datafeeds and desktop services could be shut out from accessing LSEG’s input data.

In addition, Refinitiv offers foreign exchange indices. Consolidated real-time datafeeds and foreign exchange indices are significant inputs for index providers and Refinitiv is one of the largest suppliers for these products.

LSEG’s FTSE Russell is a major provider of financial indices in the EEA and globally. The Commission has preliminary concerns that following the proposed transaction, competitors in index licensing could be shut out from accessing Refinitiv’s necessary input data.

The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.

The Commission now has until 27 October 2020 to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.

LSEG today noted the Commission’s announcement. The Exchange said it continues to engage constructively with the European Commission and noted that the Phase II review will enable the European Commission to consider the Transaction in further detail, as would be expected for a global transaction of this nature.

LSEG says it has received a number of antitrust and foreign investment approvals and continues to make progress in relation to the remaining clearances and approvals upon which the Transaction is also conditional. LSEG stressed that it remains committed to closing the transaction in 2020.

In August 2019, LSEG announced the acquisition of Refinitiv in an all-share transaction for an enterprise value of approximately $27 billion. The proposed acquisition, which was approved by LSEG’s shareholders in November 2019, significantly accelerates LSEG’s existing strategy to be a leading global financial markets infrastructure provider. Thanks to the deal, LSEG is set to markedly expand its data and analytics offering to create a global multi-asset class capital markets business.

Read this next

Digital Assets

Ripple and Lithuanian FINCI partner for XRP-based payments

Ripple is looking to expand its presence in Europe, forming a new partnership with Lithuanian electronic money institution FINCI.

Digital Assets

Crypto.com enables Shopify merchants to accept crypto payments

Crypto.com has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.

<