Sajid Javid could block Hong Kong bid for London Stock Exchange
Chancellor Sajid Javid is set to decide on whether or not to block a £32bn bid from Hong Kong for the London Stock Exchange as a government intervention appears imminent.
Javid is reportedly mulling whether to step in on public interest grounds, citing national security and financial stability risks after the Hong Kong Stock Exchange made the shock offer earlier this week.
Read more: Hong Kong bid for London Stock Exchange whips up a storm
Such a decision would normally sit with business secretary Andrea Leadsom.
But the Treasury boss has taken over control from his fellow minister due to the importance of the London Stock Exchange, The i reports.
Were Javid to intervene on public interest grounds, he would rely on the Enterprise Act 2002 to do so.
“The London Stock Exchange is a critically important part of the UK financial system, so as you would expect, the government and the regulators will be looking at the details closely,” a government spokesperson told City PM
Hong Kong’s bourse made the audacious bid on Tuesday, but doubts have risen on whether such an acquisition could go through.
If it does, LSE could not proceed with its own $27bn (£21.7bn) acquisition of financial data company Refinitiv, which shareholders hope could turn the bourse into a Bloomberg rival.
Former LSE boss Xavier Rolet questioned the Hong Kong Exchanges and Clearing move’s likelihood of getting approval.
He told the BBC a change of ownership could hurt the stability of the London Stock Exchange’s systemic functions, as well as risk the governance of the exchange.
Meanwhile both UBS and Deutsche Bank analysts pointed to significant obstacles, such as HKEX’s close links to Beijing.
If LSE did recommend the bid or it progressed into talks, other stock exchanges could leap into action to make competing offers for the company.
Read more: London Stock Exchange considers moving HQ out of the City
“ICE and CME will be watching this very very closely indeed,” one City figure told City A.M.
“The Americans will not be comfortable with the prospect of the LSE being owned by HKEX, especially when the majority of LSE customers are big US investment banks.”