UPDATE:Deutsche Boerse, NYSE Offer Derivatives Fee Cap In Merger Push
December 20 2011 - 3:44PM
Dow Jones News
Deutsche Boerse AG (DB1.XE, DBOEF) and NYSE Euronext (NYX) have
offered to cap fees related to derivatives transactions on their
combined markets for a period of three years, the latest effort to
smooth concerns of European Union antitrust officials examining the
proposed merger.
The proposal came in a letter to European Union Competition
Commissioner Joaquin Almunia and augments the merger candidates'
standing offer to divest some markets and open up services,
according to a statement from the exchanges.
"In addition to the submitted remedy proposal, both companies
expressed their commitment to maintain the current level of their
published standard fees for their European derivatives contracts
for a period of three years," Deutsche Boerse and NYSE Euronext
officials said in the statement.
A spokesman for Deutsche Boerse said that the exchanges
submitted the additional proposal few days ago, and it isn't part
of the official remedy proposal package. Another meeting is slated
between the exchanges and antitrust regulators Wednesday, according
to a person familiar with the matter.
The exchange partners last week offered to spin off all of NYSE
Euronext's European single-stock derivatives business and have
proposed to broaden access to the exchanges' clearinghouse to ease
competitors' entry, but rivals have continued to push back against
the combination, telling regulators that the measures are only
peripheral.
EU competition officials opened an in-depth probe of the
exchange deal in early August and formally outlined their
reservations in October. Their deadline for ruling on the matter
has twice been pushed back and currently is set for Feb. 9,
2012.
Almunia on Tuesday told reporters that he had reviewed the
response of customers and exchange rivals to the latest raft of
deal remedies submitted by NYSE Euronext and Deutsche Boerse. He
said he anticipated the EU ruling on the tie-up in late January or
early February.
Placing a cap on fees for trading and processing futures and
options won't have much of an impact on the earnings of the
combined company, which has yet to be named, according to BMO
Capital Markets analyst Jillian Miller. She estimated that the
merged firm would earn EUR5.50 in pro-forma earnings per share in
2013, based on the timetable the exchanges have laid out for
integration.
"Even if their fee schedule is set, they likely will still have
the potential to charge higher fees in a lower-volume environment,"
said Miller, referring to the companies' practice of awarding
discounts to customers that do heavy business on their markets.
Such a fee cap could limit some flexibility for a combined
Deutsche Boerse and NYSE Euronext, Miller said. Should the merged
entity come under pressure to lower charges for trading certain
contracts, it wouldn't be able to make up the difference by lifting
levies on other instruments.
The ruling by the EU Competition Committee isn't the region's
final say on the deal. Upon completion of its review, the
transaction will go to a vote of 27 EU commissioners. About 10% of
prior mergers subject to an in-depth review and rejected by
antitrust examiners have still won approval from the full college
of commissioners.
To build support NYSE Euronext and Deutsche Boerse have been
lobbying political figures to back their deal, which they have
positioned as a European counterweight to U.S. futures giant CME
Group Inc. (CME) and other major competitors.
The merger candidates also have pitched the efficiencies of
their deal, which they have estimated saving major customers EUR3
billion in trading collateral, as relief for banks facing
stepped-up capital requirements and pressure from Europe's
sovereign-debt crisis.
-By Jacob Bunge and Ulrike Dauer, Dow Jones Newswires; 312 750
4117; jacob.bunge@dowjones.com
CME (NASDAQ:CME)
Historical Stock Chart
From May 2024 to Jun 2024
CME (NASDAQ:CME)
Historical Stock Chart
From Jun 2023 to Jun 2024