European regulators scrutinizing IntercontinentalExchange Inc. (ICE)’s plan to buy NYSE Euronext (NYX) asked users if the merger would reduce competition in soft-commodities markets amid concern among traders over fees and trading hours.
The European Commission sought feedback on the impact for derivatives on cocoa, coffee, sugar and rapeseed and U.S. equity-index futures, according to a survey with more than 90 questions obtained by Bloomberg News. Responses to the questionnaire, which gives the first indications of regulators’ possible concerns after it vetoed Deutsche Boerse AG (DB1)’s purchase of NYSE in February last year, were due by May 24.
Soft-commodities brokers have met several times this year to discuss any potential reduction in competition from the ICE-NYSE merger, according to four people familiar with the matter. The brokers approached exchanges including CME Group Inc. to see if they would introduce new contracts for soft commodities amid concern the deal may allow ICE to raise fees or extend trading hours, said the people, who asked not to be identified as the meetings were private.
Antoine Colombani, a spokesman for the Brussels-based European Commission, declined to comment on the questionnaire. James Dunseath, a spokesman for NYSE’s Liffe in London, Fleur Howard of CME and Claire Miller, a spokeswoman for ICE in London, also declined to comment.
The European Commission survey asks clients of ICE and NYSE Euronext about fees for trading and clearing and the impact on collateral. It inquires whether respondents also trade on CME, the world’s largest futures exchange, which competes with both ICE and NYSE Euronext.
Atlanta-based ICE offers futures contracts tracking cocoa, arabica coffee and raw sugar. NYSE’s London-based Liffe derivatives exchange also offers trading in cocoa, along with contracts on refined sugar and robusta coffee.
The European Coffee Federation, whose members include Kraft Foods Europe Ltd., contacted ICE’s president and chief operating officer, Ben Jackson, on May 28 to discuss concerns associated with the merger, including trading hours, fees, and grading models, according to a May 30 letter to members by the Rijswijk, Netherlands-based group obtained by Bloomberg News.
“There has been contact with ICE and we have updated our members,” Roel Vaessen, secretary general of the European Coffee Federation, said by phone today, declining to comment on the content of the letter. “Those contacts will continue.”
ICE agreed on Dec. 21 to acquire NYSE Euronext for cash and stock totaling $8.2 billion at the time. The EU said in April it would review the exchange’s plans after national regulators didn’t object to it taking the lead. It has an initial deadline of June 24 to rule on the deal.
The commission vetoed Deutsche Boerse’s purchase of NYSE Euronext last year, citing concern about competition in derivatives trading and clearing.
ICE said in March it will cap trading fees for Liffe coffee, sugar and cocoa futures at the same level as its energy contracts for five years after its takeover of NYSE Euronext. Other European commodity futures such as milling wheat will be part of a potential Euronext initial public offering, it said.
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