Prospective merger partners Deutsche Börse and NYSE Euronext have sought to further soothe regulatory fears their deal would create a European derivatives monopoly by agreeing to freeze trading fees.
In a joint letter sent by the two exchange groups to Europe’s competition commissioner Joaquin Almunia, the parties proposed trading and clearing fees for derivatives contracts traded on Eurex, Deutsche Börse’s derivatives market and NYSE Euronext’s Liffe equivalent could be held for three years.
“Deutsche Börse and NYSE Euronext confirm that they sent a letter to Commissioner Almunia. In addition to the submitted remedy proposal, both companies expressed their commitment to maintain the current level of their published standard fees for their European derivatives contracts for a period of three years,” read a statement from Deutsche Börse. “At the same time, the companies stated that they will deliver very significant user, market and other efficiencies generated by the transaction as previously announced.”
The latest dispensation comes after two rounds of concessions made by the two bourses, which were seen as necessary if the European Commission’s competition division were to give its blessing to the deal.
The latest round of remedies extended the offer of open access to Eurex Clearing, which was heavily restricted in the initial concessions made by the exchanges, and the divesture of both firm’s single equity derivatives businesses, with the acquirer also receiving an option to access Eurex Clearing for single equity derivatives products.
In addition, the joint entity would also licence the Eurex trading system to a third party interested in launching interest rate derivatives.
European authorities are scheduled to make a final decision on the merger by 9 February, almost exactly a year after their intial merger announcement. The resulting entity, which would create an exchange with a market capitalisation of over US$9 billion, is expected to create cost synergies of US$798 million, comprising US$580 million in cost savings and US$218 million in new revenue opportunities.