Deutsche Boerse chief says future mega exchange deals unlikely

Political issues mean future cross-border mergers are less likely to succeed.

The head of the Frankfurt-based exchange group, Deutsche Boerse, believes further mega exchange deals, like the failed merger between his firm and the London Stock Exchange, will be unlikely because of national politics.

Speaking at the FIA IDX conference in London, Carsten Kengeter, CEO of Deutsche Boerse, said that cross-border deals for exchanges and market infrastructures will be unlikely to succeed.

“We seem to be in a political phase which is more nationalist in thinking, rather than supra-national in view, which I think for global markets is not necessarily a good thing… Therefore these types of deals which are infrastructure and exchange heavy on a supra-national basis seem to be more difficult,” said Kengeter.

Earlier this year, the European Commission quashed the planned Deutsche Boerse/London Stock Exchange (LSE) merger due to concerns over a monopoly in fixed income central clearing.

As well as the failure of the Deutsche Boerse/LSE deal, a number of other mega exchange deals have been blocked over the years, including proposed mergers between Deutsche Boerse and NYSE Euronext, the Singapore Exchange (SGX) and the Australian Securities Exchange (ASX), and even between ICE and Nasdaq OMX.

He suggested that exchanges involved in M&A activity will be more successful if they do not attach themselves to “heavy infrastructure bias”, and expand through “quiet advances” through FinTech and market data acquisitions.

ICE has made a number of acquisitions in this space to further its data offering, most recently acquiring the 5000 fixed income indices platform operated by Bank of America Merrill Lynch.

Bryan Durkin, president of CME Group, stated that it is looking to build its footprint it has established in Europe and taking it to “the next level internationally.”