Doubts over market merger

Frankfurt's Werner Seifert and London's Don Cruickshank hope to move the deal forward by early July

The merger talks between the London and Frankfurt stock exchanges to create the iX - international exchanges - are on track, according to officials from both markets.

London's chairman-designate, Don Cruickshank, said he was confident that more than the required 75% of LSE members would approve the deal. German officials, meanwhile, said any problems that came up during negotiations would be ironed out "within the next weeks".

German press reports, however, suggest that there is growing unrest over the direction that detailed negotiations are taking.

The deputy chairman of Deutsche Boerse's supervisory board, Manfred Zass, has warned that - depending on the circumstances - he might not back the planned merger.

Checking the small print

He told reporters that details of the merger were giving him food for thought: "The total of what is in the small print must not result in London taking over Frankfurt."

The Boersen-Zeitung newspaper, which specialises in stock market coverage, reported on Wednesday that Deutsche Boerse's advisory board had held an extraordinary meeting to discuss legal implications of the planned merger.

Member firms are reportedly concerned that the UK code for hostile take-overs could apply to German companies, and worry about the future of Frankfurt's benchmark share index, the Dax.

London or Frankfurt?

London stock market officials, meanwhile, have come under tough questioning by politicians over the implications of the merger.

Mr Cruickshank told MPs of the Treasury Select Committee that the "prospects of iX leaving London are close to minimal", but acknowledged that "there are no guarantees".

He said he expected that "the cluster of skills which is London will continue to thrive and it will be in our interest to stay in London".

Conservatives said that UK pension funds would worried about the fact that stocks they held might be denominated in euros, while their liabilities to UK pensioners were in pounds.

Euros or pounds?

The question of whether shares listed on iX would be quoted in euros or pounds proved highly contentious..

When both exchanges announced their merger, they said that "subject to market conditions the aim is for all European equity trading ultimately to be taken in euros".

Tory MPs accused the LSE's management of "having an agenda" to force "by the back door, the euro onto British investors and British companies".

Mr Cruickshank rejected the accusation, calling the line of questioning an "extraordinarily selective interpretation of anything we have said or written and I cannot understand its basis".

He acknowledged that the wording of the release could have been misread, but insisted that the London Stock Exchange would not and could not "make these decisions on behalf of institutional investors".

"It is not a choice we are making, we have not choice, we are responding to customers", he added.