Deutsch Boerse and NYSE Stock Exchange Merger Talks
Thursday, February 10th, 2011
The merger between the NYSE and Deutsche Börse AG is causing major concern in the financial world. The New York Post broke the story claiming that the deal may end “Wall Street’s claim to being the financial center of the world.”
The details of the acquisition of Deutsche Boerse that have been released thus far indicate that Deutsche Boerse will own 59 to 60 percent of NYSE’s Euronext, the headquarters would remain in Frankfurt and New York City, and Ducan Niederauer would become CEO and Reto Francioni would become chairman. One insider party to the talks has indicated that the anxiety over this decision has been overstated. He indicated that the deal was made out of an attempt to create a “diversified exchange in an industry where that’s getting harder and harder to do.”
In reality, the deal will expand the NYSE’s share-trading ability and the new exchange will gain a large share of profitable derivatives trading. However, the deal has recently hit anti-trust snags concerning these derivatives. Arthur Levitt, former Securities and Exchange Commission chairman, indicated that it was “critical” the deal go through, particularly because of the financial regulations mandated by Congress to force the derivative market into more transparent markets and dealings. The new company could garner a significant amount of that business with its expanded reach in these markets.
According to the Wall Street Journal, Deutsche Börse AG was among the first stock exchanges to enter electronic trading and new markets. This platform has absorbed most of the trading of German stocks as well as posted 50 percent profit margins generating €496 million in net profit in 2009.
It is anticipated that the deal will be closed by the end of the year. Both New York Governor and Democratic Representative Carolyn Maloney have expressed positive sentiments about the merger.
Article by Andrew Timm
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: deutsch boerse , frankfurt , merger , new york , stock exchange
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