September 12, 2011 7:52 pm

BaFin approves Deutsche Börse-NYSE merger

BaFin, Germany’s financial industry supervisor, has approved plans by Deutsche Börse to merge with NYSE Euronext, removing a regulatory hurdle in the companies’ plans to create the world’s biggest exchange group by revenues.

BaFin had approved the merger plan to transfer control of Deutsche Börse and key subsidiaries to a Dutch holding company, Deutsche Börse said on Monday. BaFin’s approval of the deal applies particularly to Clearstream, the settlement arm of the exchange group, and Eurex Clearing, as the central counterparty for the Eurex derivatives exchange.

The biggest obstacle to the merger remains a possible objection by EU competition authorities, which have indicated they are carrying out an in-depth investigation of the plans amid “significant concerns” over a combined company’s dominance in derivatives trading.

Bringing Eurex together with NYSE Euronext’s Liffe operations is set to give the as yet unnamed combined group a market share of about 95 per cent in exchange-traded derivatives in Europe, although the companies argue they also face competition from the large trade in off-exchange, over-the-counter derivatives trading.

Responding to a report that EU authorities were set to allow the merger, Larry Leibowitz, an NYSE executive who is set to become chief operating officer of the merged entity, said on Monday he had no knowledge of such a deal.

EU officials also denied that there was a plan to approve the Deutsche Börse-NYSE merger without substantial competitive remedies, while planning new rules on clearing and derivatives that would bring more competition to the sector.

Shareholders in both NYSE and Deutsche Börse have already backed the merger plan.

Deutsche Börse also requires approval from the finance ministry in its home German state of Hessen, which under German law is the regulator for the Frankfurt stock exchange.

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