FRANKFURT (Reuters) – Bundesbank board member Andreas Dombret said he was concerned the planned $29 billion merger between German exchange operator Deutsche Boerse <DB1Gn.DE> and the London Stock Exchange <LSE.L> may raise systemic risks in derivatives clearing.
“When several clearing houses come together in a single exchange operation, I see it with a certain amount of concern,” Dombret, who is in charge of banking supervision and broader financial stability at Germany’s central bank, told Reuters in an interview.
Clearing houses like Deutsche Boerse’s Eurex Clearing and the LSE’s LCH.Clearnet stand ready to act if a customer’s trading partner in the multi-billion dollar derivatives market should fail, a role that enhances systemic stability.
However, if several clearing houses are brought under one roof, this would increase the systemic relevance of the merged company and lead to mutual dependency of the clearing houses themselves, Dombret said.
“It could also create new sources of contagion,” he added.
Dombret has no official say in approving the merger but the views of Germany’s central bank are expected to be taken into account by other regulatory authorities.
Deutsche Boerse and the LSE are expected to officially notify the EU Commission of their intention to merge in the coming days, and hope the deal will close in the first half of next year after regulatory approval.
(Reporting by Andreas Kroener and Frank Siebelt; Writing by Jonathan Gould; Editing by Maria Sheahan)