U.S. exchange Bats Global Markets has secured British backing for its $300 million (192 million pound) purchase of rival Chi-X Europe to create the region's top trading venue.
Bats said on Thursday Britain's Competition Commission had approved the merger, leaving the partners free to ink the friendly deal and combine the European arm of Bats and Chi-X Europe before the end of the year.
The regulatory clearance is a boost for Bats, which has seen its Bats Europe arm grow steadily since launch three years ago but fall short of the stellar performance by Chi-X Europe.
The merger of Chi-X Europe, the top pan-European market with 20.1 percent, and Bats Europe, which has 4.8 percent, would create the largest share-trading venue in Europe, narrowly beating the London Stock Exchange
LSE, comprising the British and Italian exchanges and LSE's alternative system Turquoise, has 24.1 percent of European business, compared with a combined Bats and Chi-X market share of 24.9 percent, Thomson Reuters data showed.
Bats's position on top spot is threatened, however, by the planned merger of German exchange Deutsche Boerse
The combination of Deutsche Boerse, which has a 13.7 percent of European trading, and NYSE Euronext's 15.4 percent would give the merged group 29.1 percent, larger than both Bats/Chi-X and LSE.
The $9 billion trans-atlantic exchange deal faces stern opposition amid concern among regulators and clients over the possibility of virtual monopolies in listed derivatives trading and clearing.
The EC on Wednesday asked rivals and customers of Deutsche Boerse and NYSE Euronext whether concessions offered by the exchanges in the hope of winning regulatory approval would be sufficient to ensure competition.
The exchange operators last week proposed to sell parts of their single-stock equity derivatives businesses in key markets, and give rivals access to Deutsche Boerse's Eurex derivatives clearing house.
(Editing by Dan Lalor)