The fate of the proposed merger of Deutsche Börse and the London Stock Exchange Group may rest on where the London and Frankfurt-based exchange operators locate their holding company, even if European anti-trust regulators sign off on the mega-deal.

The London Stock Exchange said Tuesday it was in exclusive talks to sell the French arm of its derivative clearing business to Euronext, a rival exchange operator. The move is intended to appease European Commission concerns that the proposed LSE-Deutsche Börse deal could lead to the merged business exerting too much market control over the clearing of derivatives and other products.