The world’s largest exchange group Intercontinental Exchange (ICE), which controls the new York stock exchange, is considering the purchase of the London stock exchange (LSE). A formal proposal from ICE threatens to thwart the plans of Deutsche Börse, which was calculated through merger with LSE to create the third largest exchange in the world after CME ($31 billion) and ICE ($29 billion), according to Bloomberg.
ICE together with the consultants preparing a proposal that would have interrupted the conditions of Deutsche Börse, said the Agency with reference to reliable sources. The sources confirmed that the group is aware of the complexity of political and corporate character with which she may face while trying to thwart the plans of the Europeans, but LSE might be interested in an offer with a higher price. At least a counter-offer may force Deutsche Börse to raise the price, said one of the sources. We didn’t do the LSE proposal and has not yet determined a position on this issue, noted in a press release ICE.
ICE is unlikely to determine the proposal until 22 March, when Deutsche Börse LSE must send a formal bid, said Bloomberg, one of the sources. Interlocutors of Agency didn’t exclude that the American company may eventually abandon their plans. The second largest exchange group in the world CME Group also consults with advisors about buying the LSE. Negotiations are at an early stage and CME, which owns the commodity exchanges in new York and Chicago, also the idea of, specify the interlocutors of the Agency.
“This is an expected proposal — the FT commented on the plans ICE Owen Jones, an analyst at Citigroup. — The London stock exchange and used to make counter-proposals, and, despite associated with the “Brexton” risks, it is considered to be a very attractive asset. According to Jones, Deutsche Börse is unlikely to be willing to actively negotiate with competitors. “The company is strapped for cash…and, in our opinion, the revision of its proposals will lead either to the increase in the share of LSE in the new structure, or would require raising additional funds”.
Previously ICE has repeatedly expanded its portfolio through the purchase of the London financial infrastructure: in 2002, control of ICE has passed the international petroleum exchange (International Petroleum Exchange — IPE), in 2013 the London international exchange of financial futures and options (LIFFE), and in 2015 — trading platform, Trayport, specializing in commodities.
The need for consolidation of the exchange group increased with the tightening of guarantee requirements to collateral for marginal transactions. Regulators are insisting that such transactions were all provided large amounts of funds. As a result belonging to the exchanges clearing houses such as Eurex (Deutsche Börse), ICE Futures Europe (ICE) and LCH.Clearnet (LSE) have accumulated billions guarantee dollars. Purchase LSE will allow the buyer — whether it’s ICE, Deutsche Börse or CME is to help its clients to make significant savings on transactions with derivative financial instruments.