Europe's leading investment banks have issued a warning to Deutche Börse over its corporate governance arrangements ahead of a formal bid by the German operator for the London Stock Exchange.
In a carefully worded statement on how exchanges should be run after any deal is completed, the banks said that "where possible, trading platforms and central clearing and settlement operations should be owned separately". In Germany, Deutsche Börse operates a so-called "vertical silo" owning both the Frankfurt stock exchange and its clearing and settlement operations.
London's investment banks, which are the LSE's main users, are worried that ownership of the Exchange by Deutsche Börse could create conflicts of interest and drive up tariffs.
A statement from the London Investment Banking Association, along with French, Italian and Swedish organisations, said: "Central clearing and settlement services should be provided by organisations whose ownership, governance and resource allocation procedures are designed to ensure that users interests are given top priority. Central Clearing and settlement providers should be owned by users, broadly in proportion to usage."
It said that vertically integrated organisations should charge separately for trading, clearing and settlement.
The banks stopped short of opposing Deutsche Börse's proposed bid. However, the statement is designed as a shot across the bows for Werner Seifert, the Deutsche Börse chief executive, to ensure a strict corporate governance regime is introduced should it acquire the LSE. Alan Yarrow, LIBA's chairman, said: "The users felt it was time they had their views in the public arena to help the debate going forward."