The UK Competition and Markets Authority (CMA) has provisionally cleared the London Stock Exchange Group’s (LSEG) previously announced £274m acquisition of Quantile Group.
Founded in 2015, Quantile serves the global financial services industry with portfolio, margin and capital optimisation and compression services.
LSEG announced the deal in December 2021 with an aim to widen its variety of post trade risk management solutions to its customers via trade compression, capital and margin optimisation services.
The stock exchange group has a business called LCH that serves as a clearing house for different types of trades. Its activities in clearing over-the-counter interest rate derivatives (OTC IRDs) are the most important to the assessment of the deal, stated the CMA.
Quantile developed an optimisation engine that is said to offer risk rebalancing services and advanced trade compression to hedge funds, banks, and other financial institutions trading OTC derivatives.
Through the transaction, Quantile was anticipated to be complementary to the global OTC Derivatives clearing services of LSEG, which offer clients risk management and capital efficiencies.
Further, the transaction was said to advance LSEG’s strategy of offering customers a global, multi-asset class financial markets infrastructure that operates throughout the trading ecosystem.
The CMA launched the merger inquiry in March 2022 and subsequently referred the deal for an in-depth phase 2 investigation in May this year owing to possible competition concerns.
Following the conclusion of the phase 2 probe, the British competition watchdog stated that the acquisition is unlikely to lead to a significant lessening of competition. The CMA’s concern was about the supply of multilateral compression for OTC IRDs in the UK due to input foreclosure.