EU’s Deutsche Boerse Questionnaire Focuses on Derivatives

Deutsche Boerse Rivals Quizzed on Derivatives
Deutsche Boerse’s offer for NYSE Euronext would put more than 90 percent of the region’s exchange-traded derivatives market and about 30 percent of European stock trading in the hands of one organization. Photographer: Mario Proenca/Bloomberg

July 4 (Bloomberg) -- Deutsche Boerse AG rivals and customers were asked by European Union regulators whether its $9.57 billion bid for NYSE Euronext would reduce competition for derivatives and equity trading and clearing.

The European Commission, in a survey with more than 165 questions obtained by Bloomberg News, asked what effect the deal to create the largest owner of equities and derivatives markets would have on access to market data. They also asked whether CME Group Inc., the world’s largest future exchange, may become “a significant player” in trading or clearing European derivatives.

Deutsche Boerse’s offer for NYSE Euronext would put more than 90 percent of the region’s exchange-traded derivatives market and about 30 percent of European stock trading in the hands of one organization.

The number of questions is “unusual” and “shows that people are still firing at the deal” by highlighting a large number of possible problems to antitrust officials, said Matthew Hall, a Brussels-based partner at McGuire Woods LLP.

‘Usual Procedure’

Amelia Torres, a spokeswoman for the European Commission in Brussels, said the questionnaire was “part of the usual procedure for investigating mergers.” Frank Herkenhoff, a spokesman for Deutsche Boerse in Frankfurt, and James Dunseath, a spokesman for NYSE Euronext in London, both declined to comment.

The EU’s antitrust agency last week set an initial deadline of Aug. 4 to rule on the deal. Joaquin Almunia, the EU’s competition chief, said in March that he expects to open an in-depth review of the “complex deal” after the initial month-long probe.

The questionnaire was sent out last week with a deadline to reply by July 7, a “pretty difficult” limit that may see companies seek more time, Hall said.

The EU asked companies whether they see Deutsche Boerse’s Eurex and NYSE Euronext’s Liffe exchanges as direct competitors and what their nearest rivals are.

NYSE Euronext Deputy Chief Executive Officer Dominique Cerutti in February said that the companies believe the EU will approve the deal because they aren’t dominant in clearing or derivatives. They hold only a small part of a global derivatives market where the vast majority of trades are over-the-counter, he said.

Eurex, Liffe

Deutsche Boerse and NYSE Euronext resisted any suggestion that they would sell Eurex or Liffe, saying in a February statement that they complement each other ideally on interest rate products, with Eurex specializing in the long end.

Derivatives traders were asked by EU officials whether they saw “any advantages to concentrating trades in one trading venue or in one clearing venue.” Where some or all types of derivatives trade on one exchange, they were asked to say whether they could shift to another platform or what would entice them to do so.

Antitrust officials also wanted to know how important access to market data is for exchanges’ competitors and customers. The questionnaire asks whether rival exchanges can offer a competing product based on a market index without a license.

Market Data

Regulators also sought to find out whether NYSE and Deutsche Boerse compete in non-proprietary market-data services and asked how co-location and data services at the exchanges are priced and how the merger will impact the two.

Co-location enables customers to put their computers near the exchange’s engines that match buy and sell orders, reducing the time it takes their systems to receive data and make trading decisions.

Deutsche Boerse must also win the support of 75 percent of NYSE Euronext shareholders to approve its purchase by July 13.

The combined exchange should save more than 51 million euros by having common trading and clearing infrastructure, merging networks and “eliminating overlapping IT functions,” the two companies said June 1 to shareholders in Eschborn, Germany for Deutsche Boerse’s annual investor day.

To contact the reporters on this story: Nandini Sukumar in London at

Aoife White in Brussels at

To contact the editor responsible for this story: Anthony Aarons at