From Mr Jacques de Larosière.
Sir, I find the decision of the European Commission to block the NYSE Euronext-Deutsche Börse merger most unfortunate. It shows to my mind a lack of industrial vision for Europe in a market environment that is increasingly globalised.
Beyond the economies of scale and collateral that customers would have benefited from, the merger would have created in Europe a world-class player with the ability to support the competitiveness and growth of European capital markets. We indeed live in a world where exchanges are concentrating to face up to intensifying international competition and where scale is a key driver. Thus the US Department of Justice authorised the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade, creating a major global player.
The idea that a large European Union exchange could better resist international competition, that its deeper liquidity and open interest may attract issuers and investors from around the world should, in my opinion, have been central to the decision.
Some comments made – that the involvement of a US player such as NYSE could reduce the European nature of the project – leave aside the formal guarantees given that the merged entity would privilege and enlarge its European basis.
To answer concerns that such a project would have provided the future group with an excessive advantage, before the launching of measures requiring the compulsory trading of standardised over-the-counter derivatives on exchanges or electronic platforms and the clearing of these trades, strict conditions could have been imposed on the partners of the deal (in terms of increase in revenues or commissions generated, for example), waiting for the new markets in financial instruments and European market infrastructure regulations (Mifir and Emir) to be put in place.
After all, it is up to the Commission to implement rules ensuring that access to clearing is open and non-discriminatory. Using the merger project – at the risk of making it fail – to accelerate the achievement of the expected effects of the new regulations proposed seems quite questionable.
Meanwhile, global competitors around the world and particularly from the US will be celebrating this decision: the European market is now wider open for them.
Jacques de Larosière, Paris, France
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