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EU Says “Nein” to NYSE-Deutsche Börse

So the merger's off — and now there's likely to be a chill in exchange dealmaking


With the emergence of Internet technologies and globalization, it seems inevitable that there will be continued consolidation of stock exchanges. That should mean more opportunities for investors — in terms of trading options — as well as lower costs.

There’s one problem, though: politics.

Because of the threat of a monopoly over the derivatives markets, regulators in the European Union have blocked the proposed $7.4 billion merger of NYSE (NYSE:NYX) and the Deutsche Börse. They own the Eurex as well as the Liffe, which are dominant in the futures markets in Europe.

As a result, the NYSE and Deutsche Börse have cancelled their deal.

In fact, there’s likely to be a chill in dealmaking, which could put pressure on incumbents such as NASDAQ OMX Group (NASDAQ:NDAQ) and others. Acquisitions have been key in finding growth, especially as trading volumes have trailed off. There is also tough competition emerging from next-generation electronic platforms.

Still, there are some large operators that should continue to do well, such as the CME (NYSE:CME). That exchange was smart to engage in aggressive deals and focus on the red-hot derivatives market.

Article printed from InvestorPlace Media,

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