Hesse's ministry of economics, the regulator of the Frankfurt Stock Exchange, yesterday indicated that it was prepared to block the exchange's plan to merge with the London Stock Exchange.
Mr Dieter Posch, Hesse's Minister of Economics, demanded clarification on 14 questions about the merger from Mr Werner Seifert, chief executive designate of the merged exchange, which is to be called iX. The ministry indicated that if Mr Seifert failed to provide satisfactory answers, it would be prepared to block the merger by removing Deutsche Borse's licence to operate the Frankfurt exchange.
Under the terms of the operating licence, Deutsche Borse is obliged to provide "the required material, human and financial resources" to operate the Frankfurt exchange.
The ministry said this obligation would transfer to iX, but it was unclear whether it would be fulfilled.
The ministry is concerned that plans to locate iX's management and administration in London could disadvantage the Frankfurt trading platforms when future investment decisions are made.
The supervisory board of the Frankfurt exchange meets on Tuesday to vote on the proposals, but the ministry will have the final say in Germany.
In London, a senior business leader accused three US investment banks of pushing through the proposed merger in pursuit of their own commercial interests.
Mr George Cox, director-general of the Institute of Directors, said in a letter to the Financial Times that the proposed merger amounted to a "takeover" by the German exchange with "serious implications for London's continued role as "the world's leading financial centre".
