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3rd February 2012

No challenge by Deutsche and NYSE Euronext to merger block

The European Commission has universally backed the recommendation of Joaquín Almunia, the competition commissioner to block the merger of NYSE Euronext and Deutsche Börse. The decision was expected. The commissioner found that 98% of European exchange traded derivatives in Europe occur within the two organisations markets.


NYSE Euronext and Deutsche Börse previously said that they cannot offer any further concessions. On Wednesday a NYSE Euronext press statement announced the two were in discussions to terminate the merger agreement. On Thursday both markets announced that the merger deal was terminated. As this was for regulatory reasons no break up fee is payable. It is estimated the two combined spent more than $200m on planning and lobbying for the merger.


The partners argued that the view of the European derivatives market taken by regulators should include Over The Counter (OTC) derivatives in which case their market share drops down to a more acceptable level. OTC derivatives, as the name suggests are not currently traded on financial markets though plans exist to force some onto the regulated markets in the future. The two Exchanges had agreed to sell off the relatively small single equity derivatives business. They remain able to partner for deals outside of the EU. The benefits of splitting the spoils in such cases may be marginal however.