Germany’s financial regulator has delivered a double blow to London, saying it could neither host the headquarters of a merged Deutsche Börse-London Stock Exchange after the UK leaves the EU, nor could it remain a centre for trading in euros.



The head of the Federal Financial Supervisory Authority (BaFin), Felix Hufeld, said: “It is hard to imagine that the most important exchange venue in the eurozone would be steered from a headquarters outside the EU. There certainly has to be an adjustment here.”

Hardening positions in Germany, where politicians have made similar remarks, have created an additional hurdle to the planned merger, which is now in danger of unravelling after the UK opted from Brexit.

Deutsche Börse declined to comment. An LSE spokesman said shareholders would vote on the deal on 4 July and the offer terms were unchanged.

As Germany’s top financial regulator, Hufeld’s comments hold considerable weight and undermine recent statements from the LSE and Deutsche Börse that the deal will go ahead as planned.

A special committee, created by the exchanges to deal with the referendum fallout, is to meet in the coming weeks to discuss the implications, including for the merged company’s base.

Hufeld, who also sits on the supervisory board of the European Central Bank, also said London could no longer expect to be the centre of euro-denominated trading.

Such trading should move to the EU and could take place in Frankfurt, he said. “I would see this as a significant political goal to think about steps to encourage this.”