The Competition and Markets Authority (CMA) in the UK has provisionally cleared the London Stock Exchange Group’s acquisition of optimisation services provider Quantile Group following an in-depth merger investigation.

The London Stock Exchange Group (LSEG) is an international financial markets infrastructure and data business. Its Post Trade division supports customers’ clearing and reporting activities, providing risk, balance sheet and financial resource management solutions. LSEG holds a majority ownership of LCH, a multi-asset class global clearing house operator. Quantile provides a range of optimisation services for financial institutions dealing with derivative instruments, including multilateral compression services for over-the-counter interest rate derivatives cleared at LCH.

LSEG and Quantile do not compete directly with each other, but providers of multilateral compression service work with clearing houses (such as LCH) to offer their services to banks and other customers.

The CMA investigated whether post-Transaction LSEG might reduce access to LCH for Quantile’s rivals, and whether this could harm competition in multilateral compression. Following the investigation the CMA has provisionally reached the conclusion that LSEG would not have the incentive to take such steps. The CMA has found that customers value competition in the multilateral compression market and they would be able to detect and deter an attempt to restrict competition. Therefore, the CMA is provisionally minded to give an unconditional clearance to the Transaction. The CMA final report is expected to be published by the end of October 2022.

Frontier supported LSEG throughout the CMA’s Phase 1 and Phase 2 investigation process.

Frontier Economics regularly advises clients on the merger control process. For more information please contact media@frontier-economics.com, or call +44 (0)20 7031 7000.