Deutsche Boerse, NYSE Battle To Keep Merger On Track

The planned merger of Deutsche Boerse AG (DB1.XE) and NYSE Euronext (NYX) is facing severe challenges despite the efforts of the two exchange operators to appease European regulators by reducing their hold on more of their prized derivatives assets.

The companies have insisted they would drop the deal if forced to offload their Liffe and Eurex derivatives arms completely, but have floated smaller-scale asset disposals in a bid to secure approval from officials at the European Commission.

A person familiar with the situation said Wednesday that the merger partners are considering further moves after Commission officials gave a cool reception to an initial offer that included allowing rivals to access the Eurex clearinghouse for transactions and selling their overlapping European options operations.

The planned merger would create the world's largest venue for trading listed stocks and derivatives, but the dominant scale of its European futures and options arms has concerned regulators at a time when the region is pushing ahead with further liberalization of the financial sector.

A final decision is expected from the Commission in mid-January, and the prospect of forced asset sales has attracted some interest from rivals opposed to the combination.

The head of Nasdaq OMX Group Inc. (NDAQ) said Wednesday that he remained interested in acquiring NYSE's Liffe arm, but isn't interested in the European equity derivatives that the merger partners have already offered to sell.

Nasdaq and IntercontinentalExchange Inc. (ICE) unsuccessfully sought to break up the NYSE-Deutsche Boerse deal earlier this year by buying the Big Board operator. Their proposal would have seen Nasdaq acquire the securities business while ICE took on the derivatives operation.

London Stock Exchange Group PLC (LSE.LN), which is expanding its own small derivatives arm, declined to comment on any potential interest in acquiring assets from NYSE and its German partner.

"We've never been against the [DB-NYSE] deal. But we will support anything which promotes competition and choice for customers in the European market," said a spokeswoman from the London Stock Exchange.

NYSE shares were recently down 4.6% at $27.07, with Deutsche Boerse--whose shareholders would control 60% of the enlarged entity--down 3.2% at 43.11 euros.

-By Joern Rehren, Dow Jones Newswires; 49-69-29725-511; joern.rehren@dowjones.com

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

--Vladimir Guevarra contributed to this article.

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