Exchange operators seek to allay merger concerns

EXCHANGE operators NYSE Euronext and Deutsche Börse have offered more divestments in a bid to assuage European authorities’ antitrust concerns over their proposed $9 billion merger.

Deutsche Börse said in a statement yesterday that the two companies had proposed selling more European single-equity derivatives assets than previously planned, and to offer rivals more extensive access to their clearing house for trading in innovative equity index and interest rate derivatives.

A person familiar with the matter said the companies were prepared to sell NYSE Euronext unit Liffe’s single-stock equity derivatives business in Europe.

Deutsche Börse’s takeover of NYSE Euronext, first announced amid a rush of industry merger plans in February, would create the world’s largest exchange operator. The European Commission, however, has concerns that the new combined entity would have too tight a grip on exchange-based derivatives trading in Europe.

In November, Deutsche Börse and NYSE had already proposed selling overlapping parts of their single-stock equity derivatives businesses in key markets and to open up Deutsche Börse’s Eurex derivatives clearing house to outsiders for certain products.

The companies also said yesterday they would license the Eurex trading system to a third party interested in launching interest rate derivatives.

The European Commission is set to complete its review by February 9th. The companies said they expected the deal to close after that, in early 2012. EU regulators met the exchanges last week to discuss antitrust issues.

The project is also facing close scrutiny from German authorities. A regional regulator in the state of Hessen on Monday said it had raised some objections and was awaiting a reply.

This year, Eurex and Liffe have accounted for 97 per cent of European stock futures trading and 93.7 per cent of stock options trading, Federation of European Securities Exchanges data shows.

The exchanges have argued their market share is much lower if the vast over-the-counter (OTC) market is included in the assessment of the derivatives market. However, the EU has decided to exclude OTC derivatives from its review of the deal. – (Reuters)