back to article London Stock Exchange's German mega-merger: It's a go, despite Brexit

The London Stock Exchange takeover by its German competitor Deutsche Boerse (aka the "Merger of Equals") should still be going forward despite Brexit, but a planned vote by their respective shareholders throws another wildcard into how job cuts are shared between London and Frankfurt. The £12bn deal, announced in March, is due …

  1. Craig McGill 1

    Brilliant read

    Cracking read. This is the sort of thing I come to El Reg for. (Utterly chilling when you look at the scenarios and implications but still a great read.)

    1. Sam Haine

      Re: Brilliant read

      Indeed. More informative articles like this by Dominic Connor please!

  2. Zippy_UK

    Great - all this new Java code to be enhanced and maintained by 3 month retrained Cobal / mainframe programmers in their late 40's based in Frankfurt who have a very "European Social Market" style of regulated work ethic. Going no where...

  3. Len Silver badge

    I have very little doubt that Brexit will mean that the London Stock Exchange will be run from Frankfurt soon. However, couldn't some of the IT operations (and surrounding talent pool) relocate as well over time?

    Euro clearing is very likely to leave London if London ceases to be in the EU. Due to passporting some other sectors will be forced to move as well. Why wouldn't the talent pool be more evenly split between various cities as opposed to just London?

    I don't believe London as financial hub is finished with Brexit. I also don't believe one single European city will take over the crown from London. Rather, I believe we'll see a rebalancing over a number of centres. For instance, trading to Frankfurt, retail banking to Paris, Hedge funds to Amsterdam etc. etc. A more even spread with London still an important financial hub, just not the only major player in Europe any more.

    1. boatsman
      Pint

      evenly ? what for ?

      everyone ought to have a job. that's an ideal. a wish.

      the hard reality is that IF the UK does leave the EU, it will have to live with that.

      that means it doesnt want to share, and should expect to be treated in that way.

      anyway, evenly is 50 mln brits vs 330 mln EU.

      so even evenly is not going to be a very pleasant experience, especially not for London.

      on the bright site,

      - David C refuses to do a 50, leaving it up to the triumphant brexiters to do the dirty work of hurting Britain's economy even more than they already did.

      The triumphant brexiters ?? we are a little short on these, recently

      - Boris is not going to do a 50 either

      - Nigel....ditto He just keeps collecting his 100K GBP from the EU parliament until they throw him out.

      - Gove --- won't do it either. He never did/does what he promised/promises

      - Mrs May was and is a remainer.

      So, for anyone watching the show,

      there is not going to be a Brexit.

      just let it sink in.

      there is not going to be a Brexit.

      cheers, and welcome back. It will cost the British people, of course. as usual....

      1. Doctor Syntax Silver badge

        Re: evenly ? what for ?

        "Mrs May was and is a remainer."

        I'm not convinced about that. The EU was liable to get in the way of her ambition of a surveillance state. I think she just assumed Remain would win and she wanted to stay in Cabinet.

  4. Voland's right hand Silver badge

    Do not think so

    The merger of the London Stock Exchange and the Boerse should give us a first look at how post-Brexit financial markets will work.

    Nope, because the politics card has not been played yet. It is still "yet another corporate acquisition" at this point in time.

    Sure, the merger cannot be stopped at present and the systems can go to London as UK has not invoked article 50 and officially is still a Eu member which cannot be discriminated against.

    How this will pan out after article 50 is invoked is in "God only knows" territory.

    1. Les Matthew

      Re: Do not think so

      "How this will pan out after article 50 is invoked is in "God only knows" territory"

      I think that applies to just about everything.

  5. Jonathan Richards 1
    Pirate

    Distance matters...

    ...when high-frequency trading comes into the picture. If your way of (making money | sucking blood) relies on arbitrage between prices on a scale of milliseconds, then you can't afford to be waiting even a few milliseconds for information from distant markets. London already has the IT infrastructure to support this (important financial mechanism | disturbing parasitism).

    1. happy but not clappy
      Meh

      But HFT maybe a bad thing

      Is there scope for an IEX which prevents HFT in Europe? I'm not sure I want to buy/sell shares if some flash twat can see my orders and arbitrage the buy-sell before they are matched. Fair markets and all that.

    2. Tom 7 Silver badge

      Re: Distance matters...

      But borders will matter more. No point in HFT if it costs (and it will) to get the micro-pennies back into europe.

    3. Len Silver badge

      Re: Distance matters...

      You are, of course, correct. It does, however, work both ways. If all Forex trading in euros moves to Frankfurt (as is fairly likely) then it would make sense for any HFT Forex businesses to follow that particular market to Frankfurt to stay physically close to the exchange.

    4. Anonymous Coward
      Anonymous Coward

      Re: Distance matters...

      Milliseconds might as well be years. HFT applications have latencies of the order of microseconds, and differences of the order of tens of nanoseconds are important. Co-location is the only option.

      1. Mage Silver badge
        Coat

        Re: Distance matters...

        Dublin & Frankfurt.

        Or even Galway or Cork and Frankfurt. New cable at Mayo and T connection to Cork, on transatlantic fibres.

        What with all the other Internationals that will exit UK to EU (Vodafone, HSBC and many others already muttering about moving), Sterling may become unimportant. It's hard to see how UK can avoid invoking Article 50 before the end of the year. I wish it wasn't, but wishful thinking won't avoid it. That's how the mess was created.

  6. Doctor Syntax Silver badge

    The worrying thing is that a lot of Leave voters will be glad to see it go. What was that about taking back control?

    1. codejunky Silver badge

      @ Doctor Syntax

      "The worrying thing is that a lot of Leave voters will be glad to see it go. What was that about taking back control?"

      Reading the article it seems nothing has changed. It was all arranged pre-brexit, still happening post brexit with them wanting it moving there and us wanting things moving here. The only thing changing seems to be another excuse. With or without the excuse london is still the financial centre of the world and europe is still miffed it aint them.

      1. Mage Silver badge
        Coat

        Re: london is still the financial centre of the world

        Till Article 50 ...

        You can't put the clock back to 1973 by leaving EU. It's not 1947 either.

        In the long term, if Brexit comes to pass (seems hard to avoid it now), the UK's International parasites will move out, the Import and re-export to Ireland and other traditional UK markets with no added value will end. The illusion of UK being 5th or 6th largest economy will be exposed (it's a little like Ireland being the largest banana exporter in the world, which they were or are despite growing none). Scotland will leave UK and N.I. will riot as it goes to 20%+ unemployment and bankruptcy due to a tighter border than ever existed after 1922, no CTA or shared currency as there was 1922 - 1979.

        The papers and Politicians are still full of unrealistic optimism that can only be realised by cancelling "Brexit"

        1. codejunky Silver badge

          Re: london is still the financial centre of the world

          @ Mage

          "You can't put the clock back to 1973 by leaving EU. It's not 1947 either."

          Why do people keep posting this in favour of remain? The EU is the institution harking back to those days. It amuses me when the forward thinking are accused of trying to turn the clock back just as the globalists are accused of being little Englanders.

          1. smartypants

            Globalists?

            I would be surprised if even 1% of the brexit vote had anything to do with encouraging even more globalism.

            We all know that the main themes were the standard daily fail fare:

            1) "stop more people coming into the country" (taking our jobs/nhs/dole/council houses etc.)

            2) "take back control" (i.e. dodge all those evil brussels laws about clean beaches, fire-retardant material and electrical safety)

            Globalists generally consider that the free movement of people is a core part of a free market, especially in a world where people's skills are often the think being traded. A lot of the vote for brexit was off the back of an awareness of migrants coming in to do various jobs for less than the locals.... so to portray Brexit as demand by the people for more Globalisation seems wrong to me.

            1. codejunky Silver badge

              Re: Globalists?

              @ smartypants

              "I would be surprised if even 1% of the brexit vote had anything to do with encouraging even more globalism."

              Of course because such a narrative doesnt suit the remain campaign. The idea that sitting in a little isolationist cartel and crippling countries with amazingly bad crisis is somehow pushed as a good thing, that is how backwards the argument was! However if we get out of the pantomime (both official campaigns were that bad) we can look honestly. We have a queue of countries wanting trade deals. We can freely bin the stupidity enforced upon us. And we dont need to apply the huge tariffs on anyone not in the little club. We can actually trade with the world! The idea of brexiters all being racists and xenophobes plays well to a crowd just as bremainers (I hate these names) are trying to build the next Reich. FUD.

              "Globalists generally consider that the free movement of people is a core part of a free market"

              Nope, ha, wrong. Instead a sensible approach is a decent immigration policy, something that has incentive for people we want. Freedom of movement is an isolationist grouping afraid of the world is not globalism.

              "1) "stop more people coming into the country" (taking our jobs/nhs/dole/council houses etc.)"

              Some people are like that. They were before, still are. So the remain people who want global trade should get together with the globalist leave people and do good for the country. But assuming anyone with the wrong opinion only reads the daily mail or is racist is nothing more than a tantrum. And the globalists are stuck fighting isolationists while the remain group stomp their feet.

              "2) "take back control" (i.e. dodge all those evil brussels laws about clean beaches, fire-retardant material and electrical safety)"

              Yes we really need laws threatening jail time and fines for selling a wrongly curved banana. Or the insanity of a financial transaction tax. Definitions of can or not be sold as marmalade. Or recent suggestions of ignoring and fighting any party the EU deems extreme.

              "so to portray Brexit as demand by the people for more Globalisation seems wrong to me."

              Look at it from the wrong side and it does. You mention skills being the thing being traded, so that is free movement of skilled labour. Something entirely different. And our infrastructure has to be able to cope, so why give privilege to the EU cartel instead of the best in the world? Why impose heavy tariffs on anyone except the cartel? Why define daft laws which are regressive? Why demand more and more money into the EU machine (even in a recession)? Why impose crisis on member countries?

              Of course globalists want out of the EU. As do the racists. So what does that make the people who want to remain?

              1. Doctor Syntax Silver badge

                Re: Globalists?

                "We have a queue of countries wanting trade deals."

                Really? Where?

                All I see is a queue of companies planning to leave so they can stay in the EU.

                1. codejunky Silver badge

                  Re: Globalists?

                  @ Doctor Syntax

                  "Really? Where?

                  All I see is a queue of companies planning to leave so they can stay in the EU."

                  You may not want to advertise the lack of real world information in your sources and their severe bias.

              2. Roland6 Silver badge

                Re: Globalists?

                We can actually trade with the world!

                This is one point that I've not seen any Brexit fan come up with any meaningful example of where being a member of the EU has inhibited the UK exporting to "the world".

                All the examples they've come up with have been about how being in the EU prevents us importing stuff, ie. sending our already negative balance of trade further into the negative.

                1. codejunky Silver badge

                  Re: Globalists?

                  @ Roland6

                  "This is one point that I've not seen any Brexit fan come up with any meaningful example of where being a member of the EU has inhibited the UK exporting to "the world"."

                  Trade. The 2 way street. If you ban enough facts you can make any case.

                  "All the examples they've come up with have been about how being in the EU prevents us importing stuff, ie. sending our already negative balance of trade further into the negative."

                  Is that a justification for harming poor countries? Paying higher prices for EU stuff because we have to apply punishing import tariffs on anyone outside the EU unless they have a trade deal (any of the important ones?). I wonder what the deficit looks like if we pay less for what is imported. I wonder how much better things could be if we set up trade deals with the queue already wanting them and with others that even the EU cant seem to get done.

                  The EU is in one of the worst economic conditions in the world. There was a fear of China going into recession yet that would have little direct impact on us. The EU is in a worse state and yet they have a direct impact on us. The growing successes in this world do not have trade deals with the EU. We could get on with it.

                  1. Roland6 Silver badge

                    Re: Globalists?

                    @codejunky - QED ! :)

                    You comment is totally lacking in specifics, which was my complaint.

                    I wonder how much better things could be if we set up trade deals with the queue already wanting them and with others that even the EU cant seem to get done.

                    I'm not interested in your daydreams but in reality, hence how about some names of countries in the queue?

                    1. codejunky Silver badge

                      Re: Globalists?

                      @ Roland6

                      "You comment is totally lacking in specifics, which was my complaint."

                      Ah. Your comment wasnt specific. It just claimed that the EU had no impact on exports which is something you ask brexiters to justify in some meaningful way which is why I explained imports are highly important. Specifically the high tariffs we must impose on those outside the EU to protect the cartel. That is a problem as how will a poor country develop if they are excluded from trade? And our prices are higher because the cartel insists we must buy through them.

                      "I'm not interested in your daydreams but in reality, hence how about some names of countries in the queue?"

                      New Zealand is the first to jump to mind. Not only are they interested in trade but also offer its negotiators to help us with the EU. With Obama on his way out the US is very interested (particularly republicans). Australia and South Korea have approached us. Since we have been looking more toward China we could do that, especially as Iceland managed it after leaving the pre-EU. Apparently we are already approaching Hong Kong and Brazil.

                      And we aint even out yet.

  7. Beachrider

    Even with Article 50 by November...

    I agree with others that this merger won't be delayed by the Article 50 work. UK will be out of the EU by November 2018. They will just hedge their bets by doing "disaster recovery" infrastructure in Amsterdam, or something like that. Nobody expects the major EU capital market to be outside the EU, for very long.

    1. Doctor Syntax Silver badge

      Re: Even with Article 50 by November...

      "UK will be out of the EU by November 2018."

      Given that the majority of all major parties seem to to want it I reckon the likelihood of the whole thing being kicked into the long grass must be about 50:50.

      1. Tom 7 Silver badge

        Re: Even with Article 50 by November...kicked into the long grass

        You may find, if it is kicked into the long grass, the financial centre may be a little dysfunctional due to some un-planned outages of windows and other building parts.

  8. Nick Leaton

    1. Tobin taxes are coming to the EU now the UK is out. If you're a CEO jump at your peril.

    2. Block chain is coming, and then D Bourse is redundant. Their business model disappears just as fast as mini cab firms with the arrival of Uber.

    1. Dominic Connor, Quant Headhunter

      Tobin Taxes are Stupid but useful

      ...to the UK.

      If the rump EU adopts Tobin taxes then London does very well. Germany used to do something very similiar which is one big reason why despite the German economy growing rather better than the UK for 70 years, Frankfurt is the 14th most important finance centre in the world and London is 1st.

      The argument for Tobin taxes is:

      They will reduce trading

      They will raise lots of money because they won't reduce trading

      The X billion will only hit banks because banks are nice and won't pass on the extra costs.

      No one except speculators uses financial markets and pension funds, companie raising capital and selling things to other countries are figments of Thatcher's imagination.

      1. Doctor Syntax Silver badge

        Re: Tobin Taxes are Stupid but useful

        "the rump EU"

        Fog in the channel, continent isolated.

  9. Anonymous Coward
    Anonymous Coward

    Is that £350 million a week?

    "or what percentage of their planned 1,250 job cuts would be made up of IT Pros to hit the promised £350m in cost savings."

    I'm sure I've heard that amount put forward recently, although I gather it it soon evaporated after people voted.

  10. allthecoolshortnamesweretaken

    The merger between the London Stock Exchange and Deutsche Boerse has already failed twice. I'm not sure yet that third time will be the charm.

  11. John Smith 19 Gold badge
    Unhappy

    "HFT" or to be more honest automated man-in-the-middle robbery

    Hijacking real share trades and effectively "taxing" the real buyers.

    Relocating to Frankfurt should kill the time advantage HFT's needed to pull off their scam.

    If Frankfurt refuses to allow co-location of course.

  12. Croc O'Dial

    Good book.

    I recommend you read Roger Bootle's book "The trouble with Europe". It's surprisingly prescient considering it was revised a few months before the referundum. Never underestimate the resilience of good 'ol Blighty. The clue's in the name, Great Britain. Great is what we are because Great is what we do. MPs come and go as do governments but there's one rock of solidity No. 10 can rely on and that's the Chief Mouser To The Treasury, namely, Larry the cat.

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