LSE-Deutsche Boerse tie-up should not be scuppered by Brexit - Jupiter

Heightened political sensibilities following UK's non-binding vote to quit the EU should not be used to scupper the London Stock Exchange-Deutsche Boerse merger, says a key stakeholder.

Earlier this week, LSE shareholders voted overwhelming in favour of the tie-up, but some question whether it could be completed under existing terms after the Brexit vote.

But a fund manager at Jupiter Asset Management has said the deal should not be torpedoed over "political sensibilities" linked to the UK quitting EU.

Jupiter is one of Deutsche Boerse's largest shareholders.

Alexander Darwall, a fund manager at Jupiter Asset Management, one of DB's largest investors, told the Wall St Journal the deal delivered efficiency and scale benefitting customers.

He said the tie-up gave Europe "a really good opportunity" to compete on a global scale and that it was "more important as much of the European banking system is under strain."

Nonetheless, German regulators remain concerned on the location of the combined group's holding company, which the two exchanges have previously said would be in London.

BaFin, the German financial regulator, is opposed a London hadquarters, its president, Felix Hufeld, expressed disbelief that the "most important exchange venue in the eurozone would be steered from a headquarters outside the EU."

However, Darwall told the Wall St Journal he held a different view: "I do not care, from an emotional point of view, where the [holding company] of the company is headquartered.

"I do not want the deal to be changed and risk losing it altogether," he told the publication.

"This deal should not be about political sensibilities. It should be first and foremost about meeting customers’ needs."

BaFin is among the 20 regulators need to approve the merger.

The journal reported that one potential solution was to set up two holding companies, one in London and the other in Frankfurt, that would control the joint-operating businesses.