Bloomberg News

NYSE-Deutsche Boerse Offer Derivatives Fees Cap to EU

December 28, 2011

(Adds company confirmation from first paragraph, details of next steps from fifth paragraph.))

Dec. 20 (Bloomberg) -- NYSE Euronext and Deutsche Boerse AG told antitrust regulators they would impose a three-year ban on derivative-fee increases should they approve their merger.

The exchanges would agree not to raise published trading and clearing prices for derivatives on NYSE Euronext’s Liffe exchange and Deutsche Boerse’s Eurex market, Deutsche Boerse said in an e-mailed statement today. The remedy was sent last week after the exchanges submitted a revised set of proposals including the sale of NYSE’s Liffe single-stock equity derivatives business to the European Union, two people familiar with the situation said earlier today.

Officials are analyzing the exchanges’ previous offers, EU Competition Commissioner Joaquin Almunia said today. The exchanges are trying to convince European regulators that merging to create the world’s largest exchange operator won’t stifle competition in derivatives and clearing.

James Dunseath, a spokesman for NYSE Euronext in London, declined to comment. The companies sent the new remedy in a letter to Almunia, Deutsche Boerse said.

The exchanges plan to meet European regulators to discuss the revised remedies before the European Commission breaks for official holidays on Dec. 22, the two people said. If the meeting suggests the remedies are still insufficient, the exchanges will continue to press their case, they said.

Competition Agencies

Before deciding whether to approve or block a deal, the European Commission must consult competition agencies from the European Union’s 27 nations. Commissioners from each EU country must also vote on a decision. Companies can then appeal a merger ban at the EU courts. The last day the commission can rule is Feb. 9.

NYSE and Deutsche Boerse have already offered to give any buyer the option to access Eurex Clearing for post-trade processing and said they will license the Eurex trading system to a third party interested in offering interest-rate derivatives. Liffe is based in London.

Exchange executives have been negotiating with European regulators who told Frankfurt-based Deutsche Boerse and New York-based NYSE at a meeting in Brussels on Dec. 6 that their Nov. 17 offer to divest some European single-equity derivatives units didn’t sway customers and rivals, according to people familiar with the discussions. Regulators weren’t convinced that offering competitors limited access to Deutsche Boerse’s clearinghouse would do enough to foster competition for exchange-traded derivatives, the people said.

The meeting followed two days of talks with regulators in October where the exchanges also failed to alleviate antitrust concerns. Regulators have told the companies that their merger would monopolize derivatives trading in the region.

The takeover would put more than 90 percent of the region’s exchange-traded derivatives market and about 30 percent of European stock trading in the hands of one company.

--Editors: Chris Nagi, Andrew Rummer

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net;

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net;


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