A meeting this Friday between European regulators and Deutsche Börse and NYSE Euronext could be the last chance for the exchanges to make the case for their merger as press reports suggest more ground must be conceded to secure clearance.
The two markets presented concessions to the competition division of the European Commission (EC) on 18 November that were designed to quell fears the joint entity would exert monopolistic behaviour in the European exchange-traded derivatives market.
Combined, Deutsche Börse’s Eurex derivatives unit and NYSE Liffe, the derivatives market of NYSE Euronext would have over 95% market share in many types of European exchange-traded derivatives.
But the remedies were derided by a number of market participants and appear to have led to the EC demanding the exchange do more to secure their deal. However, speaking last week, a spokesperson for Deutsche Börse emphasised that no further concessions would be made.
A preliminary decision by the EC’s competition division is expected after Friday’s meeting, with a final decision scheduled for 23 January 2012.
The concessions presented by DB/NYSE centred on providing competing derivatives trading venues with access to Eurex Clearing. But this was subject to a number of provisos that many market participants consider as insufficient.
The two exchange operators said they would divest the portions of their business in which they overlap, specifically NYSE Euronext’s Bclear clearing and trading service for single equity derivatives, excluding the options business in its home markets and Deutsche Börse’s respective units in France, the Netherlands, Belgium and Portugal.
“The remedies are far from sufficient. They also raise complex issues of practicability, reliability, compliance and monitoring that will make them ineffective,” Hans-Ole Jochumsen, president of Nasdaq OMX Nordic, told theTRADEnews.com last week.
Some market participants have suggested that one potential option for the exchanges would be the sale of NYSE Liffe, but a Deutsche Börse spokesperson emphasised that this was “not an option”.