SMEs worried about impact of LSE-DB merger

Dutch SME group says combined entity will have adverse effect on smaller markets.

Small businesses have raised concerns about impact on smaller countries of the proposed merger between Deutsche Boerse (DB) and the London Stock Exchange Group (LSEG).

Michaël van Straalen, chairman of Dutch SME association MKB-Nederland, said the combined entity would be roughly 10 times as large as its nearest rival, Euronext, which would have an adverse effect on activity taking place in markets not covered by the LSEG and DB exchanges.

“A party that is so large and dominant will somehow have an impact on the activity taking place on other trading venues,” he said. “The Amsterdam exchange (Euronext) – the oldest trading platform in the world – offers companies a platform to enter the capital market. A stock exchange is an important part of a developed finance landscape.”

Van Straalen added that he is concerned investors will increasingly focus on doing business via this enlarged group than on Europe’s many smaller markets, including the Netherlands.

“The strength of the Netherlands in raising risk capital will reduce and it is expected that it will be much more expensive. There must remain sufficient competition and good financing solutions close to home. That is in the interest of Dutch entrepreneursm,” he explained.

The LSEG and DB merger has been approved by shareholders but will still need to pass competition regulators before it can complete. Concerns have been raised about the size of the enlarged group in trading of securities and in post-trade services. The combination of its clearing brands, LCH and Eurex, would make it a clearing powerhouse and smaller clearing houses are worried it will be able to cross-subsidise to out-price its rivals.