* CEO says allegations will prove unfounded
* Says timing of share purchase was determined by board
* Says insider trading goes against his "innermost
* Plans to create 300 jobs in Frankfurt
(Adds CEO comment on headquarters)
By Edward Taylor
FRANKFURT, Feb 16 The head of Deutsche Boerse
said insider trading allegations against him were
unfounded, pointing out that he did not determine the timing of
his share purchases ahead of the announcement of merger plans
with the London Stock Exchange (LSE).
"Insider trading is against my innermost conviction,"
Deutsche Boerse Chief Executive Carsten Kengeter told a news
conference, adding that he and the German company were
cooperating fully with the public prosecutor.
The fate of a plan to create Europe's largest stock exchange
is closely tied to that of Kengeter, who has negotiated a deal
that would see him become chief executive of the combined group.
German prosecutors are examining whether a share purchase
plan for Kengeter was created at a time when Deutsche Boerse was
aware that a merger with the LSE was likely.
In December 2015 Deutsche Boerse allowed him to invest 4.5
million euros ($4.8 million) in Deutsche Boerse shares at 75
euros apiece, while granting him a further 4.5 million euros in
shares. Deutsche Boerse said negotiations about a combination
with LSE started in the second half of January 2016.
German police and prosecutors this month searched Kengeter's
office and apartment as they investigate whether secret merger
talks with LSE were already under way at the time the package
"When I purchased the shares using my own funds, I did not
do so at a time of my own choosing," Kengeter said on Thursday.
"I did so between 1 and 21 December 2015 within a time-frame
fixed by the supervisory board," he said, adding that the shares
were subject to a holding period until the end of 2019.
He declined to say whether it was already clear in December
2015 that a merger with LSE would be attempted, saying he could
not comment on the ongoing investigation.
Deutsche Boerse and LSE are proposing basing the main
holding company's headquarters in London, despite calls by
regulators in the German state of Hesse to transfer more
responsibility to Frankfurt. The Brexit vote has amplified those
Kengeter responded to critics by saying a failure to
complete the 25 billion euro ($27 billion) merger with LSE would
weaken Germany's main financial centre, Frankfurt.
"Any concerns that Frankfurt as a financial centre might be
disadvantaged by the proposed business combination fail to
recognise one thing: the biggest risk to Frankfurt... is doing
nothing," he said.
Kengeter said that Deutsche Boerse would create an
additional 300 jobs in Frankfurt, adding that he was engaged in
constructive talks with policymakers in Hesse, Deutsche Boerse's
home state, and with antitrust regulators in Brussels.
Regardless of where the combined holding company is
headquartered, the regulatory laws ensure that Frankfurt retains
key responsibilities over the Frankfurt Stock Exchange and Eurex
Deutschland, Kengeter said.
"The two exchanges as well as post trading and the market
data business will remain in Frankfurt, even after the merger,"
The state regulator in Hesse has the right to veto a deal
since it grants Deutsche Boerse its operating licence and local
politicians have made clear they expect Deutsche Boerse to make
more concessions to strengthen Frankfurt's role.
Asked whether he could envisage moving the overall
headquarters to Frankfurt, Kengeter said, "This is a speculative
question which I currently cannot answer."
Regulators in Brussels and Hesse's capital Wiesbaden need to
give the green light by the end of June to prevent the current
offer from expiring, Kengeter warned.
($1 = 0.9407 euros)
(Editing by Maria Sheahan/Keith Weir)