NYSE Euronext and Deutsche Börse have told the European Commission (EC) they will offer open access to clearing should the two exchange groups be allowed to complete their proposed merger.
In a submission to the EC’s directorate-general for competition, the two firms said they would grant third-party access to Eurex Clearing, the central counterparty operated by Deutsche Börse, for interest rate and equity derivatives.
They added that the provision of Eurex Clearing’s services to competitors would be offered on a fair, reasonable and non-discriminatory basis and include cross margining.
The two bourses have also committed to divesting the portions of their business in which they overlap, specifically NYSE Euronext’s Bclear, its clearing and trading service for single equity derivatives, excluding the options business in its home markets. Deutsche Börse would sell off its respective units in France, the Netherlands, Belgium and Portugal.
The exchanges say that the remedy proposal is designed to address the EC’s “remaining concerns in derivatives trading and clearing while preserving the compelling industrial logic of the transaction”.
The decision to offer open access to Eurex Clearing preempts proposed reforms by European authorities. The European markets infrastructure regulation (EMIR) and MiFIR, a regulation accompanying MiFID II, both include rules that would force vertically-siloed exchange groups to open up their clearing services to third-parties. EMIR could be finalised by the end of this month, while the MiFID review is scheduled for completion in 2013.
The move could also be welcomed by Turquoise Derivatives, the pan-European derivatives market owned by the London Stock Exchange Group, after NYSE Liffe, the clearing house owned by NYSE Euronext, refused to allow LCH.Clearnet to offset margin in FTSE 100 index futures.
Deutsche Börse and NYSE Euronext first agreed to merge in February 2011, in a deal that would create an entity with a market capitalisation of US$9 billion. The deal has attracted criticism from a number of rival bourses including the London Stock Exchange and Nasdaq OMX, which have both expressed concerns over the monopoly the merger would create in the exchange-traded derivatives market.
In accordance with EU merger regulation, yesterday’s submission by Deutsche Börse and NYSE Euronext automatically extends the European Commission’s review period by the deal by 15 days. A final decision on the merger is due by 23 January 2012. If approved, the two parties hope to complete the deal shortly afterwards.