The Securities and Exchange Commission has joined the U.S. Department of Justice in approving the merger of NYSE Euronext with Deutsche Boerse.
The remaining hurdle: Obtaining approval from competition commissioners of the European Commission.
The European antitrust authority appears on the brink of recommending that the merger not be approved. The panel’s concern: That the merger of the two companies’ European derivatives markets and clearing operations would create a monopoly.
Deutsche Boerse operates Eurex Group, the second-largest derivatives market in the world, and NYSE Euronext operates NYSE Liffe, the third-largest. The two want to compete on a worldwide basis with CME Group, the Chicago Mercantile Exchange operator that is the number one derivatives marketplace extant.
The combination would serve as a “gold standard” for the security and derivatives industry, Deutsche Boerse CEO Reto Francioni said in a keynote speech at the Global Securities Finance Summit Wednesday. “The new group would pose an attractive alternative to less transparent and unregulated alternative trading venues and dark pools, as well as in transparent over-the-counter trading," Francioni said.
The merger partners have tried to appease regulators by saying they will sell off part of our single equity options and single stock futures business, institute an unprecedented opening up of DB’s clearing subsidiary Eurex, and establish a three-year ceiling on base commissions on derivatives contracts.
“We won’t go any further since it would put the industrial logic of the operation at risk,’’ NYSE Euronext Deputy CEO Dominique Cerutti told Europe's La Tribune. “I would find it harmful and incomprehensible to oppose the creation of a powerful block that will consolidate and strengthen Europe."
The competition commissioners have until Feb. 9 to render their opinion.