The German financial sector watchdog, BaFin, said Tuesday it is opposed to a merged company made up of the London and Frankfurt stock exchanges being based in Britain in the wake of the British vote to quit European Union.

"It is hard to imagine that the euro area's most important stock exchange would be managed out of a site outside the EU," BaFin chief Felix Hufeld said on the sidelines of a conference in Frankfurt, quoted by the German news agency DPA. 

"Adjustments will certainly have to be made in that respect," he added. 

Under their proposed merger, the holding company combining Deutsche Boerse and the London Stock Exchange will be legally domiciled in London, while the day-to-day running of the separate subsidies will be handled out of corresponding headquarters in London and Frankfurt.

After 52 percent of Britons voted in a historic referendum last week to leave the EU, both Deutsche Boerse and LSE were adamant that their proposed merger would go ahead. 

But criticism is growing in Germany that the merged company will be legally domiciled in the UK. 

LSE shareholders are to vote on the plans at a meeting in July. 

The tie-up, which both sides describe as a "merger of equals", will create one of the world's biggest stock exchanges.

Under the agreed terms, Deutsche Boerse shareholders will end up with 54.4 percent of the new holding company's capital, and LSE shareholders with 45.6 percent.

The tie-up also still needs to be approved by a number of national competition authorities, as well as by the EU.

The BaFin does not have a formal say in the matter, but its consulted in an advisory capacity.