Global Financial Strategy - EC asks industry about NYSE/DB merger

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EC asks industry about NYSE/DB merger

Friday 16 December 2011 – by [email protected]

The European Commission is seeking responses from the securities and trading industry to the revisions offered in the proposed NYSE Euronext and Deutsche Boerse AG merger, in a bid to tackle competition concerns.

The EC sent a questionnaire this week – seen by Global Financial Strategy – to competitors and clients of the two exchanges asking if the revised deal put forward by them is sufficient to address competition concerns.

The EC’s competition division is currently investigating DB’s planned $10bn (€7.3bn) takeover of NYSE Euronext, fearing that the takeover could make the company too dominant in the derivatives markets.

The revisions offered by the two firms, in an attempt to stop the EC from blocking the deal, are thought to include selling off NYSE’s Liffe single-stock derivatives business and also to allow buyers to access Eurex Clearing for post-trade processing, but these have not been made public.

Together, DB’s European derivatives exchange Eurex and NYSE Liffe account for over 90 per cent of derivatives trading in Europe, and the EC says they “represent an ongoing competitive constraint to each other in these areas”.

The questionnaire asks whether “the scope of the revised remedies package is sufficient to restore the current competition between Liffe and Eurex in the markets concerned by the present transaction that would be eliminated as a result of the proposed merger”.

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It also asks if the new package has the “potential to create a viable competitive business” able to effectively compete with the merged entity in the area of derivatives trading and clearing in Europe.

The deadline for responses to the EC’s questionnaire is 19 December.

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