NYSE Euronext and Deutsche Boerse said they would shed overlapping European derivatives businesses and open up clearing services to derivatives rivals, in a bid to win European regulators’ approval of their $10.1 billion merger.

The proposals came Thursday evening, as the two operators of exchange, clearing and market technology businesses met a deadline to propose remedies to antitrust concerns raised by the European Commission’s Directorate-General for Competition (DG Competition).

The merger partners said they proposed to eliminate any overlap in their businesses that execute trades in options, futures or other derivatives based on individual European stocks and to operate the Eurex clearing business in a fashion that “ensures continued competition in European interest rate and equity index derivatives.”

Here’s what Deutsche Boerse and NYSE Euronext said.

European single equity derivatives: "NYSE Euronext would divest its pan-European single equity derivatives business, including Bclear, except the options businesses in its home markets, where Deutsche Börse would divest its respective business."

European interest rate and equity index derivatives: "Deutsche Börse and NYSE Euronext propose to grant third-party access to Eurex Clearing for derivatives product innovations taking advantage of the merged entity‘s clearing services. The clearing services would be provided on a fair, reasonable and non-discriminatory basis and include cross margining."

Deutsche Börse and NYSE Euronext said approval of the transaction and the merging of the two companies “ will have no detrimental effect on competition, but rather will enhance it by delivering a regulated, stable and transparent European counterweight to established market centers in America and Asia and delivering significant efficiencies to users of our markets.”

In part, that can be translated to say that if two American derivatives marketplaces could be allowed to merge, so can two European marketplaces. In a presentation to press Thursday, Eurex noted that it was the largest such market in 1999, ahead of the Chicago Mercantile Exchange and the Chicago Board of Trade, which later merged.

Now, the resulting CME Group is the largest such marketplace, beating out Deutsche Boerse’s Eurex and NYSE Euronext’s Liffe, originally known as the London International Financial Futures and Options Exchange.

NYSE and DB noted that, by submitting a proposal Thursday, their merger will not take place until next year – even if their remedies are accepted.

The competition board’s review now gets an additional 15 business days to be finished.

That means the review can last until January 23.

-- This article first appeared on Securities Technology Monitor.



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