IT key to stock exchange takeover

The Deutsche Borse stock exchange will need to win approval from investment banks and regulators for possible changes to trading...

The Deutsche Borse stock exchange will need to win approval from investment banks and regulators for possible changes to trading technology at the London Stock Exchange if its planned takeover is to be successful.

If the takeover goes through, it is believed the Frankfurt exchange would consider replacing the London Exchange's Sets trading platform with its own Xetra platform to cut costs.

The issue highlights the central role of IT in discussions over mergers and acquisitions.

Deutsche Borse has made an initial offer of about £1.3bn but has not yet made an official bid.

Deutsche Borse boasts that it is one of the largest IT providers in Germany. It provides operating services to 17 exchanges and its main trading platform, Xetra, is regarded by some analysts as superior to Sets.

But the cost and risk of forcing London banks and brokers to move to a new trading platform would prove controversial and could meet with resistance unless user concerns are addressed.

Rick Cudworth, partner in the national technology practice at professional services firm KPMG, said that a successful bidder for the London Stock Exchange would have to prove that their trading technology can be integrated into the merged exchange without disruption to trading.

A spokesman for Deutsche Borse said it would discuss its plans for Sets privately with the London Stock Exchange.

The London Stock Exchange declined to comment.

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