September 13, 2018 / 12:14 PM / 10 days ago

UK watchdog says to investigate CME deal to buy NEX

(Reuters) - Britain’s antitrust watchdog is launching an investigation into whether U.S. exchange operator CME Group’s $5.5 billion acquisition of NEX Group will lessen competition, the regulator said on Thursday.

Terry Duffy, CME Group Chairman and CEO, speaks at the Sandler O'Neill + Partners Global Exchange and Brokerage Conference in New York, U.S., June 7, 2018. REUTERS/Brendan McDermid

CME agreed to buy NEX in March, creating a cross-border powerhouse for investors trading in the multi-trillion dollar foreign exchange and government debt markets.

A union of the two firms would enable investors to access cash and futures trading and over-the-counter services via one provider for the first time, improving access to markets, NEX’s founder and chief executive Michael Spencer said.

The UK’s Competition and Markets Authority (CMA) said it would announce by Nov. 8 whether it will refer the deal for an in-depth investigation.

The takeover was expected to attract regulatory challenges over the new entity’s potential dominance in some markets, especially U.S. government debt, where CME is already in the top position.

An attempted merger between Germany’s Deutsche Boerse and the UK’s LSE was struck down by European regulators last year, saying the deal would have resulted in a monopoly in the processing of bond trades.

CME’s deal to buy NEX is its largest since the financial crisis. It bought NYMEX in 2008 for $11 billion.

NEX and CME were not available for immediate comment.

Shares in NEX, known as ICAP before the sale of its voice-broking business to TP ICAP in 2016, were up almost one percent at 1220 GMT.

Shares of CME, owner of the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange, were indicated up 0.5 percent.

Reporting by Arathy S Nair in Bengaluru; editing by Jan Harvey and Jason Neely

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