As news comes that the shareholders of both NYSE-Euronext and Deutsche Borse have approved their proposed merger, leaving the decision firmly in the hands of the European competition authorities, the UK’s Office of Fair Trading has published its report on the proposed BATS-Chi-X merger.
It notes that the LSE/Turquoise, Chi-X and BATS are the only platforms with a market share greater than 1% in trading of UK-listed equities. Chi-X made a profit for the first time in 2010 and BATS is expecting to make a profit for the first time in 2011.
The OFT’s decision to refer the proposed merger to the Competition Commission is based on its concern about the consequences for competition if the number of effective rivals was reduced from three to two. Interestingly, it arrives at this conclusion in spite of the fact that few customers were opposed to the merger and many, indeed, were in favour.
The next step is a review by the Competition Commission, expected by December (assuming the merger is still on by then, as some shareholders in CHi-X are reported to be looking at alternatives).