Deutsche Boerse/NYSE Merger On Shaky Ground

Last Updated: 31 January 2023

The planned merger between Deutsche Boerse and NYSE Euronext looks set to follow in the footsteps of many of last year’s failed exchange mergers after European regulators indicated they plan to block the deal.

According to a report in the Financial Times, Joaquín Almunia, the European competition commissioner, has told the two exchanges that he plans to recommend against the approval of the deal unless the parties are willing to sell one of the derivatives business owned by the groups.

Deutsche Boerse’s Eurex is Europe’s largest derivatives exchange and NYSE’s Liffe is the second-biggest. Regulators are concerned that the tie-up would see one company taking control of 90 percent of the European exchange-traded derivatives markets and that this would lead to a drop in competition in the market.

Despite making some concessions on this point—including agreeing to cap derivatives trading and clearing fees for three years—both firms have displayed an unwillingness to consider the kind of sell-off advocated by the EU.

Representatives from both exchanges are said to be meeting in New York today to come up with a plan to lobby European officials to allow the deal to go through.

Almunia’s proposal will need to be approved by EU representatives from each of the member countries, and securing political support could allow the exchanges to argue their case against his recommendations. Commissioners are due to meet to discuss the matter on February 1, with a final decision expected on February 9.

In a statement today, NYSE said it has not yet received any official decision from the European Commission and that it could not comment on speculation that the regulator planned to disallow the deal.

However, it added: “Under the European Commission’s formal process, any preliminary recommendation by the case team would subsequently be vetted and acted on by the entire European Commission. We look forward to pressing the case for this compelling transaction in that forum.”

In practice, however, it is rare for commissioners to go against the recommendations of Almunia’s case team.

The deal’s collapse would be the latest in a long line of recent failed exchange mergers. Last year saw deals between the London Stock Exchange and TMX and Nasdaq OMX/ IntercontinentalExchange and NYSE fall apart, though hopes had been much higher for the success of the Deutsche Boerse/NYSE deal after it secured the support of both sets of shareholders.



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