The European Commission has opened an in-depth investigation into the $27 billion acquisition of Refinitiv by the London Stock Exchange Group (LSEG).

It will investigate concerns that the deal could result in reduced competition in trading and clearing of various financial instruments and in financial data products.

The proposed acquisition, announced in August 2019, would combine the activities of LSEG and Refinitiv. LSEG operates trading venues and clearing houses. It also offers financial data products, such as trading data from the London Stock Exchange and the FTSE100 equity index.

Refinitiv offers financial data products, such as desktop services and datafeeds. Refinitiv also controls Tradeweb, which operates electronic trading venues for many financial instruments.

The proposed transaction would result in the Refinitiv shareholders ultimately holding an approximate 37 per cent economic interest in LSEG and less than 30 per cent of the total voting rights of LSEG.

The EC highlighted specific concerns over the transaction’s effect on the electronic trading of European government bonds, as the proposed transaction combines major trading venues where electronic trading of bonds of the European Economic Area (EEA), UK and Swiss governments takes place, including the LSEG's MTS and Refinitiv's Tradeweb, which are market leaders and close competitors in this space.

The investigation also suggested that it is difficult for a new trading venue to attract clients in sufficient numbers and become a real alternative to incumbent venues.

The EC’s executive vice president for competition policy Margrethe Vestager, said: “Access to financial market infrastructure and financial data products is needed to make investment decisions, trade, and to protect savings.

"We have opened an in-depth investigation to assess whether the proposed transaction which will combine the activities of LSEG and Refinitiv would negatively affect competition in these markets - it is key for a well functioning financial market to ensure that market participants continue to have access to financial market infrastructure and financial data products on competitive terms."

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