Singapore Regulator Raises Concerns Over LSEG-Refinitiv Deal

Source: Regulation Asia Editors, Regulation Asia 2020-07-07

Singapore’s competition regulator has concerns about whether Refinitiv’s widely used WM/Reuters FX benchmarks would be offered to rival providers at fair and reasonable terms.

CCCS (Competition and Consumer Commission of Singapore) has completed its Phase 1 review of the USD 27 billion acquisition of Refinitiv by LSEG (London Stock Exchange Group) and has decided a more in-depth review is necessary.

CCCS was asked in April to assess whether the proposed acquisition infringes on the Competition Act, which prohibits mergers that may lessen competition within any market in Singapore.

According to CCCS, third party feedback has revealed concerns around whether the merged entity will continue to supply Refinitiv’s widely used WM/Reuters foreign exchange benchmarks at fair, reasonable and non-discriminatory terms to rival providers.

The WM/Reuters FX benchmarks are considered critical inputs for index licensing and derivatives clearing services and the industry benchmark for foreign exchange reference rates, for which there is “no reasonable substitute”.

CCCS says Refinitiv’s affiliation to a major clearing provider (LCH Group) as well as a major index licensing provider (FTSE Russell) may “reduce its incentive to continue the supply of inputs to rival providers.”

Further, CCCS is unable to determine whether competitors are able to deploy “effective and timely counter-strategies” to mitigate the risk of foreclosure of access to the WM/Reuters FX benchmarks.

CCCS invites Refinitiv and LSEG to offer commitments to address the potential competition concerns as it moves to a more detailed Phase 2 review, which could take up to 120 business days.

Last month, the European Commission similarly opened an antitrust probe into the LSEG-Refinitiv deal amid concerns that it may reduce competition in trading and clearing of various financial instruments and in financial data products. A final ruling is expected by 27 October, unless if authorities demand concessions to satisfy antitrust concerns.

The US FTC (Federal Trade Commission) is said to have begun looking at the deal in early June.

CCCS

Refinitiv

London Stock Exchange

Singapore Regulator Raises Concerns Over LSEG-Refinitiv Deal

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