European equities broker Exane BNP Paribas has serious doubts about the likelihood of Deutsche Börse's merger with the London Stock Exchange going ahead.

In a research note to clients on Monday, the firm said the probability of the deal closing is less than 50%, citing concerns over competition and the UK's potential exit from the European Union.

“The LSE may still have an independent future; the courtship may not lead to marriage, regardless of the number or suitability of suitors,” said equity analyst Thomas Jacquet.

Offers from ICE, CME or Hong Kong's securities and futures exchange are likely given the risk of being locked out of the European derivatives market if the merger goes ahead.

New York Stock Exchange-owner ICE has already confirmed that it is considering a bid and has until 29 March to make or announce an offer to rival Deutsche Börse.

“We believe that ICE could bid up to £35 per share and see slightly higher chances of a deal being approved by the competition commission than Deutsche Börse plans,” Jacquet added.

The broker also said that LSE and DB are competitors in derivatives in the future and hence sees a good chance of the deal being blocked by the competition commission.

Thirdly, in the eventuality of Brexit, Jacquet expects political intervention will seek to block the deal.

Exane BNP Paribas, which runs a cash equities, derivatives and asset management business, has a target price of £30 on LSE shares, including 15% M&A premium.

The broker rates clearing house LCH.Clearnet and FTSE/Russell as the top attractions for global exchanges when it comes to the London Stock Exchange.

“LCH presents a unique opportunity to tap into the significant growth of OTC clearing; erect barriers to entry by combining exchange traded derivatives and OTC open interest; and compete against other ETD exchanges," added the research note. 

“FTSE-Russell offers exposure to ETF growth, and enhances growth in derivatives.”