EU to rule on giant stock exchange merger


BRUSSELS – The EU reveals its decision Wednesday on a bid to create the world’s largest trading exchange, a proposed merger of stock markets from Frankfurt to New York. Even the dealmakers expect the verdict of competition commissioner Joaquin Almunia, who will hold a press conference in Brussels at about 12:30 pm (1130 GMT), to sound the death-knell for the tie-up after a year-long bid to beat transatlantic regulators’ concerns. Deutsche Boerse and NYSE Euronext have dazzled brokers with their plan to create a trading Goliath worth over $17 billion (14 billion euros). NYSE Euronext chief executive Duncan Niederauer told the Financial Times there is only a “glimmer of hope” the deal will win approval. Sources have warned for weeks that the European Union’s anti-trust inspectors could not give a green light to a single company, which also runs markets in Paris and Amsterdam, controlling 90 percent of Europe’s derivatives trade — despite concessions offered. The deal faced big hurdles with protectionist passions aroused on both sides of the Atlantic, according to specialists.

In the United States, the idea that the New York Stock Exchange would fall into foreign ownership certainly proved controversial. Deutsche Boerse shareholders would own 60 percent of the combined, Netherlands-incorporated firm. The US Justice Department said in December that Deutsche Boerse would have to sell its 31.5 percent stake in Direct Edge Holdings, the fourth-largest exchange operator in the United States. But Europe too had concerns, a probe by EU competition authorities opened in August triggering other demands. The companies proposed back in November to separate some of their derivatives operations to allay concerns raised, but sources said Brussels remained unsatisfied. The head of the Frankfurt exchange, Reto Francioni, focused instead at a recent dinner with journalists on “organic growth” and insisted his company was optimistic about 2012, merger or no merger. “It was the shareholders of NYSE Euronext who would have stood to gain more from the tie-up,” said LBBW analyst Martin Peter. He added: “Deutsche Boerse is better positioned than the Americans.” The London Stock Exchange is hoping to challenge Deutsche Boerse, though, by taking over the other large European clearing house, LCH.Clearnet. However, the long-anticipated global consolidation in the sector is proving ephemeral: last year, an alliance between the London and Toronto stock exchanges ran aground and Australia also vetoed a merger between the Sydney and Singapore stock exchanges.