…HKEX countered LSE’s cold response with a charm offensive, bringing in UBS Group AG and HSBC Holdings Plc to try to persuade shareholders of the merits of its proposal, Bloomberg reported.

“I don’t think the HKEX shareholders were keen for them to take on even more debt,” said Niki Beattie, founder of consultancy Market Structure Partners in London. “With the backdrop of unrest in Hong Kong, it probably would have been difficult for both sides to ignore it and that could be blown into something bigger on both sides. Therefore better to save face earlier on.” …

If the bosses of the London Stock Exchange were in possession of a book on business etiquette in Asia, they threw it out of the window on Friday afternoon. The exchange’s blistering rejection of a £32bn merger approach by Hong Kong Exchanges and Clearing (HKEX) ensured the maximum loss of face for chairwoman Laura Cha and her chief executive Charles Li.

… “I don’t think this is a coincidence,” said Niki Beattie, founder and chief executive of Market Structure Partners, an exchange advisory company. …

… The LSE choice is between “letting go of a deal that has much greater certainty versus waiting for what could in fact be more than a year of political deliberations,” said Niki Beattie, founder of consultancy Market Structure Partners in London. Such roadblocks can “suck the life out of the organization.” …

…Niki Beattie, founder of Market Structure Partners, said: “It’s proven very difficult for exchanges to get deals done with other exchanges either because of competition issues or because of protection of “perceived national assets”.

It was a view echoed by Mr Schwimmer, who acknowledged the difficulties in attempting an international exchange mega-deal but said the Refinitiv acquisition was different. “Cross-border exchange transactions are pretty challenging. That can be for political or industry reasons. This is not a cross-border exchange transaction.” …

… LSE will be buying, not selling, but the result is the same: A $27 billion deal to create a global powerhouse in data and trading platforms that will more than double the value of the Blackstone group’s initial equity investment in Refinitiv in just 10 months. LSE added almost $4 billion in market value in the first trading day after the talks were confirmed.

“Schwimmer was clearly brought in to do a deal and seems to be delivering,” said Niki Beattie, founder of Market Structure Partners. “The deal shows the importance of data in the world going forward.” …

…“There is a wider market concern about exchanges and data vendors combining,” said Niki Beattie, founder of Market Structure Partners. “The global world of data distribution is presided over by a small number of players who have a lot of power.”…

…LSE has previously sought to bulk up by merging with Deutsche Boerse, a deal that would’ve vaulted the combined firm into the ranks of the biggest global exchange firms, along with CME Group Inc. and Intercontinental Exchange Inc. But that combination was blocked by regulatory hurdles, and Schwimmer ruled out big exchange mergers after taking the job.

“The LSE is clearly pursuing deals that are more vertical than horizontal, presumably after seeing competition difficulties issues arise when some deals with other exchanges are mooted,” said Niki Beattie, founder of consultancy Market Structure Partners in London.

In recent months, LSE has benefited from a program to link up with Chinese markets and a move by European regulators in February to allow euro clearing on both sides of the English Channel under any Brexit scenario.
…

…But the lobby groups for HFT on both sides of the Atlantic are ready to step up their arguments if the pilots show signs of gaining traction.

“You have to let markets evolve and let them decide,” said Niki Beattie, founder of Market Structure Partners, a consultancy, and non-executive chair of XTX Markets, which supports speed bumps.

“You can give people choice but if you haven’t got competition then you can’t do it.”

…Mr Schwimmer’s US contacts from his Goldman years may be just as important to the LSE in future — the US contributes a fifth of the LSE’s revenues, and Mr Rolet had expressed fears that some of the LSE’s prized clearing, processed at LCH, could move to the US if Brexit upsets current arrangements.

“The failed Deutsche Börse deal shows how hard it still is to do a deal in Europe,” said Niki Beattie, founder of Market Structure Partners, a markets consultancy. “Perhaps a good deal is more likely to come from North America, as cross-border issues are growing in Europe and maybe the board are thinking about that.”…

…Aquis’s broker, said revenues were 19% ahead of his expectations, while costs were in line. As well as winning subscribers for its exchange, Aquis has expanded into selling trading and surveillance technology.

However, Aquis chair Nicola Beattie warned that Brexit will increase costs by about 5%, including those linked to the regulatory approval needed to open new offices in Paris. Aquis is monitoring Brexit developments and could move trading of EU stocks to the French capital….