NYSE and Deutsche Boerse in mega-merger talks

NYSE Euronext and Deutsche Boerse are in talks over a tie-up that could create the world’s largest securities exchange, as the London Stock Exchange confirms its merger with Canada’s TMX.

Reuters

"This transaction creates a group that is both a world leader in derivatives and risk management and the premier global venue for capital raising," Deutsche Boerse and NYSE Euronext said in a joint statement.

NYSE Euronext’s equities markets which include the New York, Paris, Brussels and Amsterdam stock exchanges, already represents one third of the world equities trading.

Under the terms of the merger deal, Deutsche Boerse would hold between between 59 to 60 per cent of the new exchange, while NYSE shareholders would own 40 to 41 per cent.

However, it is unclear whether European regulators will accept the new combined exchange as the merger would create a monopoly in the EU.

"The largest outside risk in our minds is whether the European regulators would grant approval of a deal that combines the two main European futures exchanges -- Liffe and Eurex," Chris Allen, analyst at Evercore Partners, said in a note to clients.

"This could be seen as creating a de facto monopoly within European futures, but this is a similar landscape to one we have within the US."

On Wednesday, the London Stock Exchange announced a merger with TMX to create one of the world's biggest trading platforms, set to dominate the raw materials and energy sectors.

"The battle of the exchanges has intensified," Simon Denham, head of London-based Capital Spreads told AFP.

"Announcing their tie-up just after the LSE's announcement that they plan to merge with TMX is a clever move that's taken the wind out of the LSE's sails," he said.