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Carsten Kengeter Deutsche Börse
Image: picture-alliance/dpa/B. Roessler

Insider trading allegations

February 16, 2017

Will it be third time the charm? Deutsche Börse, which operates the Frankfurt Stock Exchange, is hoping to merge with the London Stock Exchange - but accusations of insider trading threaten to scupper the deal.


The head of Germany's main stock market, Deutsche Börse, has denied insider trading allegations against him.

But the suggestion he bought millions of euros worth of shares in the company before announcing its plans for a tie-up with the London Stock Exchange have raised new questions about that merger.

Speaking to Deutsche Börse's annual news conference in Frankfurt, Carsten Kengeter said he was "convinced the accusations would prove unfounded."

This comes after prosecutors said they were looking into his purchase of 4.5 million euros ($5 million) in Deutsche Börse shares in December 2015. Two months later, the share price skyrocketed after the announcement of talks between Deutsche Börse and the LSE.

But the prosecutors believe preliminary talks between the two exchanges took place as early as July 2015. German news magazine "Der Spiegel" reported discussions of the merger plans with government officials one month before they were made public.

Kengeter avoided questions about a possible resignation at the news conference. Deutsch Börse has said the allegations are "without merit," describing the shares in question as part of an executive pay package.

Now the good news

The firm revealed it had had a strong 2016, with adjusted profits rising 14 percent to 811 million euros, while revenues grew 8.0 percent to 2.4 billion euros. Underlying profit before interest and taxes grew almost 13.0 percent to 1.2 billion euros.

Deutsche Börse's finance executive Gregor Pottmeyer said the planned merger with LSE had caused costs of 66 million euros last year. Should the deal go through, he said, it would cost around 150 million euros.

Kengeter said unspecified "progress" had been made toward the merger, which would create an exchange comparable in size with the Hong Kong exchange.

This is not Deutsche Börse's first attempt to merge with the LSE. The two tried to tie the knot in 2000 and 2005, but both attempts were quashed by shareholder revolts.

This time, the climate for a deal appears better amid fears British companies could lose preferred access to European markets once the UK leaves the European Union.

Ay union of the two exchanges would have to clear regulatory requirements. The LSE formally offered last week to sell clearing house LCH Clearnet SA to European competitor Euronext if the European Commission approves the deal at the end of a competition probe.

sgb/hg (dpa, Reuters, AFP)

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