The merger of NYSE Euronext and Deutsche Boerse has been cleared on the New York side of the Atlantic Ocean.

The operator of the New York Stock Exchange announced Thursday that its merger with the operator of the Frankfurt Exchange has been cleared by the Antitrust Division of the United States Department of Justice.

The Justice Department issued a consent decree that allows the merger to proceed but with Deutsche Boerse required to divest itself of an interest it holds in a rival U.S. stock exchange, Direct Edge.

That stake is held by the International Securities Exchange, an options exchange operator based in New York. ISE in turn is wholly owned by Eurex, the derivatives exchange of Deutsche Boerse.

ISE has held its 31.54% minority stake in Direct Edge since 2008. ISE will have two years from the closing of the merger to complete the sale.

“We are very pleased to have received the approval of the DOJ, an important milestone on our path to completing our compelling Trans-Atlantic combination,” said Duncan L. Niederauer, CEO, NYSE Euronext.

The biggest obstacle to the completion of the DB-NYSE merger remains on the Frankfurt side of the Atlantic Ocean.

There, the European Commission remains skeptical of the merger, largely due to the prospect that Deutsche Boerse will be combining its ownership of the Eurex derivatives exchange with NYSE Euronext’s Liffe derivatives exchange, once known as the London International Financial Futures and Options Exchange ...

Those two venues dominate the trading of derivatives in Europe, according for roughly 90 percent of volume.

On Wednesday, NYSE Euronext and Deutsche Boerse reportedly learned their latest round of concessions don’t allay fears that they would not unfairly dominate the derivatives trading and clearing business in Europe, should they be allowed to merge.

Bloomberg reported that the latest proposals, which include capping fees on derivatives trading and clearing for three years, the sale of NYSE’s Liffe single-stock derivatives business, and the licensing of the Eurex trading system to an independent party, don’t go far enough.

Deutsche Boerse and NYSE Euronext will see where European regulators put their own stake in the ground by February 9.

Tom Steinert-Threlkeld writes for Securities Technology Monitor.



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