The EU has today launched an in-depth investigation into whether the attempt by the Frankfurt stock exchange to merge with its London exchange rival harms competition.
The LSE and Deutsche Boerse tie-up would create a financial markets behemoth competing with the likes of the Chicago exchange and ICE in the US as well as the Hong Kong stock exchange in Asia.
The EU team, led by Competition Commissioner Margrethe Vestager, has 90 days to assess the merger which has already hit turbulence after the shock decision by Britain to quit the European Union.
"Financial markets provide an essential function for the European economy," Vestager said in a statement announcing the wide-ranging probe.
"We must ensure that market participants continue to have access to financial market infrastructure on competitive terms," she added.
The merger would ring up one of the globe's biggest groups for stock listings and market data, tying the Frankfurt-dominated euro zone to a post-Brexit London.
Crucially, it would also handle more super risky derivatives trades than any other venue in the world, becoming a hub for what is sometimes called shadow banking.
The proposed deal has drawn sharp rebukes from France, Belgium, Portugal and the Netherlands, fearful that their own stock exchanges, owned by Euronext, will get buried in the aftermath.
In addition to the London market, LSE also operates the Milan stock exchange and the LCH Clearnet clearing house, where hundreds of billions of euros in foreign currency trades and risky derivatives are processed, outside the eye of banking regulators.
Deutsche Boerse operates the Frankfurt exchange, as well as the Luxembourg-based clearing house Clearstream and the derivatives platform Eurex.
Clearing houses are an increasingly vital part of financial markets, insuring buyers and sellers against their counterparts pulling out of a deal in exchange for cash guarantees.
London hosts roughly €1.3 trillion of euro clearing transactions every year, a status that is now in danger with the British vote to leave the EU.
Originally, the new company was to be headquartered in London and run by the current CEO of Deutsche Boerse, Carsten Kengeter.
But German regulators and politicians are reluctant to see the Frankfurt exchange run from a non-EU country.
Deep concerns over competition helped scupper two earlier attempts by the companies to merge, in 2000 and 2005.
Deutsche Boerse has also tried to combine forces with NYSE Euronext in 2011, which operated the New York, Paris, Amsterdam, Brussels and Lisbon exchanges at the time.