CCCS grants conditional approval for LSEG's acquisition of Refinitiv units, assets

THE Competition and Consumer Commission of Singapore (CCCS) on Monday said it granted conditional approval for the London Stock Exchange Group's (LSEG) acquisition of certain Refinitiv Holdings' subsidiaries and assets.

The competition watchdog approved LSEG's final commitments to address competition concerns arising from the transaction, it said in a press statement. The final commitments are effective from Monday and will last for 10 years.

During the CCCS review, third parties raised concerns about their continued access to Refinitiv's WM/Reuters foreign exchange (FX) benchmarks, which are "critical inputs with no reasonable substitutes" to competing providers of index licensing and derivatives clearing services.

The CCCS was concerned that the deal would reduce the incentive for the merged entity to continue supplying WM/R FX benchmarks on a non-discriminatory manner, as Refinitiv would be merged or affiliated to LCH Group, a major clearing provider, as well as FTSE Russell, a major index licensing provider.

To address these concerns, the LSEG is making the WM/R FX benchmarks available to all existing and future customers to provide index licensing services. The benchmarks are also available to clearing houses for providing clearing services in Singapore.

LSEG is also ensuring pricing and other commercial terms applied to the WM/R FX benchmarks is not changed in a way that constitutes a "de facto failure" to make the benchmarks available to these customers.

The British company will not reclassify or redefine WM/R FX benchmarks in a manner that undermines the efficacy of the commitments. It will also deal with the customers in relation to any future contracts regarding access to the benchmarks for index licensing or clearing purposes, in good faith.

Moreover, a monitoring trustee will be appointed to monitor compliance with the commitments. This includes assessing all complaints regarding a potential breach of the commitments. A fast-track dispute resolution mechanism will also be available for users to seek recourse. If this fails, the complainant may request arbitration.

CCCS's approval is conditional upon the implementation and compliance of LSEG's final commitment. LSEG notified CCCS of the Refinitiv transaction on March 27, 2020, and closed the deal on Jan 29, 2021.

CCCS invited public feedback on LSEG's proposed commitments from Jan 27 to Feb 9, 2021. These commitments were later refined following feedback from industry players and customers.

In August last year, LSEG agreed to buy financial information firm Refinitiv in a US$27 billion deal that will transform the company into a market data and analytics giant.

LSEG generates revenue from customers in Singapore through its activities in capital markets, post-trade and risk management, information services and technology services.

Meanwhile, Refinitiv has three primary business segments: data and analytics, capital markets and workflow solutions, as well as risk management services.

In their application to CCCS, both parties noted that the transaction "will not raise competition concerns under any plausible market definition, or have any material effect on any relevant market in Singapore".

This is because post-merger, the parties will continue to face strong competition from a wide range of competitors, including Bloomberg and JPMorgan, LSEG and Refinitiv said.

However, they noted that the two companies overlap in providing fixed income index licensing services (excluding hybrids such as convertibles and preferred securities) to customers in Singapore.

READ MORE:

• CCCS invites feedback on LSEG's proposed acquisition of Refinitiv
• London Stock Exchange seals US$27b deal for Refinitiv to form financial data giant