The odds of a merger between the stock exchanges of New York and Europe dramatically lengthened last night after it emerged the European Commission competition regulator has recommended blocking the deal.
Competition Commissioner Joaquin Almunia is understood to have come down against the merger after NYSE Euronext and Deutsche Borse refused to sell one of their derivatives exchanges.
NYSE Euronext owns the New York Stock Exchange and Euronext exchanges, plus Liffe, the London-based derivatives exchange. Deutsche Borse owns Eurex, the second-largest derivatives exchange in Europe. In some categories of popular derivatives products, the combined group would control more than 90 per cent of all trading.
NYSE Euronext and Deutsche Borse announced their plan to merge last February, and the Commission has been studying the competition effects of the plan since the early summer. Mr Almunia plans to formally recommend blocking the deal at a meeting of fellow commissioners on 1 February.
The chief executives of the two companies are planning to meet today to discuss the way forward, which could include unleashing a major lobbying effort on the other commissioners.
Mr Almunia could be outvoted, particularly if politicians in Continental Europe can be persuaded the deal will create a powerhouse exchange group that will benefit local jobs – but it is rare for the Competition Commissioner to be overruled.
The $17bn combination has been plagued by regulatory uncertainty and investors who approved the deal last year have got cold feet because of concessions that the two companies have already offered to make to competition authorities and because of the threat of a "Tobin tax" on trading in Europe.