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Thursday, May 16, 2024 | Back issues
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EU Blocks Merger of Financial Powerhouses

(CN) - The European Union's executive body shut down a proposed merger Wednesday of the world's largest exchanges for financial derivatives based on the European market.

Deutsche Börse and NYSE Euronext's plan to meld into one massive equity and derivatives exchange would have created a "quasi-monopoly" and hindered competition, the European Commission said from Brussels.

Deutsche Börse's Eurex and NYSE Euronext's Liffe control 90 percent of global trade in European financial derivatives. If merged, the resulting exchange would have effectively blocked competitors from entering the game, stifling innovation and leading to "significant harm to derivatives users and the European economy as a whole," according to a press release.

"The merger between Deutsche Börse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide," Commission Vice President Joaquin Almuniain said in a statement. "These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive. We tried to find a solution, but the remedies offered fell far short of resolving the concerns."

The Frankfurt-based Deutsche Börsoe's called the decision a "black day for Europe and its future competitiveness on global financial markets."

"The EU Commission's decision is based on an unrealistically narrow definition of the market that does no justice to the global nature of competition in the market for derivatives," the company said in a statement.

NYSE Euronext announced from New York that the companies had already moved to terminate the proposed agreement.

"Our merger would have created a high standard for transparency, stability and efficiency in the global capital markets, and we proposed significant and tangible remedies designed to address the European Commission's concerns with the transaction," NYSE Euronext Chairman Jan-Michiel Hessels said in a statement. "But as we made clear throughout this process, we would not agree to any concessions that would compromise or undermine the industrial and economic logic of the proposed combination."

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