EU Says “Nein” to NYSE-Deutsche Börse

by InvestorPlace Staff | February 1, 2012 11:28 am

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[1] of NYSE (NYSE:NYX[2]) 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[3]) 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[4], such as the CME (NYSE:CME[5]). That exchange was smart to engage in aggressive deals and focus on the red-hot derivatives market.

Endnotes:
  1. blocked the proposed $7.4 billion merger: http://www.reuters.com/article/2012/02/01/dboerse-nyse-eu-idUSL5E8D11DX20120201
  2. NYX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NYX
  3. NDAQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=NDAQ
  4. continue to do well: http://blogs.wsj.com/deals/2012/02/01/nyse-deutsche-borse-winners-and-losers/
  5. CME: http://studio-5.financialcontent.com/investplace/quote?Symbol=CME

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