A battle for control over the MTS European electronic bond trading platform appears to be behind rival bids for the Milan-based Borsa Italiana stock exchange.
The London Stock Exchange has confirmed that it is in talks with the Borsa over a merger, while the Wall Street Journal has reported similar moves by European exchange NYSE Euronext.
The Borsa has already exercised its call option rights to purchase all Euronext shares in MBE Holding, the joint venture company that owns 60.73% of MTS. The holding company is 51% owned by Euronext, with the Borsa owning the remaining 49%.
Control over MTS - a regulated European electronic exchange for government bonds and other types of fixed income securities – would extend the LSE’s influence and trading reach.
But the London exchange faces rivalry from Euronext and a potential stumbling block as the investment banks that hold minority shares in MTS and are its largest users look set to oppose the Borsa’s attempts to seize hold of the trading platform.
The banks expressed alarm, saying they have little confidence in the way the bond platform would be run under the Italian exchange, the Financial Times reported.
They are understood to be particularly concerned about the Borsa’s control of the post-trading clearing and settlement infrastructure and the implications for the cost of bonds trading.
Meanwhile, the London Stock Exchange has gone live with its own flagship electronic trading platform TradElect, the final element in a four-year technology overhaul.