FRANKFURT, Dec 4 (Reuters) - Deutsche Boerse's chief executive has sought to reassure Frankfurt over its merger with London Stock Exchange Group, saying the German regulator will retain power over the exchange when it becomes part of a larger London-based group.
Carsten Kengeter told the Frankfurt Chamber of Commerce in a letter seen by Reuters that the markets watchdog for the regional state of Hesse, where Deutsche Boerse is headquartered, will ensure that the exchange invests enough in Frankfurt.
The owner of the Frankfurt stock exchange is obliged by law to support the development of Frankfurt as a centre for securities trading and Hesse's market watchdog has yet to give its view on the planned merger.
Deutsche Boerse has to lobby hard for the $30 billion merger agreed in March to create a European trading powerhouse amid opposition from Hesse lawmakers and regional industry bosses against plans to set up the joint holding company in London, even after Britain's vote to leave the European Union.
The Hesse regulator will still be able to "act effectively" with sanctions including rescinding the holding's voting rights in the Frankfurt exchange, Kengeter's letter said.
"This applies entirely irrespective of the UK headquarters of the HoldCo or of any repercussions from Brexit," the CEO said in response to questions from the Frankfurt Chamber of Commerce.
Deutsche Boerse has invested a substantial amount in the state of Hesse over the past five years and would "continue to actively develop our infrastructure operated out of Frankfurt".
A spokeswoman for Deutsche Boerse said the CEO saw no possibility ahead of the legal closure of the deal to amend shareholder-backed plans to base the new holding company in London.
The European Commission is scheduled to decide by Feb. 13 on the antitrust approval of the deal, which can be extended once the exchanges offer any remedies. (Writing by Ludwig Burger; Editing by Alexander Smith)