04 August 2011

FN: Deutsche Börse rebuffs merger critics

Deutsche Börse has rebuffed growing criticism of its landmark merger with NYSE Euronext, claiming that the controversial deal, which is currently being investigated by Europe's antitrust authorities, will benefit Europe by increasing liquidity and lowering the cost of raising debt and equity.

Deutsche Börse said: "The transaction will provide significant benefits for customers, issuers, and the European economy as a whole -- and many of these benefits will accrue to stakeholders directly. The transaction will increase the number of market participants, improve their access to the companies’ exchanges, and extend the number of available products increasing liquidity and lowering the cost of raising equity or debt."

In the statement, the exchange addressed claims that the new group will monopolise listed derivatives trading. It said: "There is limited head-to-head competition between Eurex and Liffe, and they face strong competition from OTC. Eurex and Liffe compete with each other only to a very limited extent because their instruments are largely complementary. The Eurex and Liffe combination will continue to face strong competition from European and non-European exchanges including the CME Group, ICE, the London Stock Exchange, Nasdaq OMX, and other trading platforms, and OTC."

The exchange also rebuffed criticism of the exchange's vertical silo clearing model, whereby the exchange funnels all trading on its platform into its clearing houses and prevents third-parties from accessing the clearing pool. Critics said the model will lock in users and prevent other upstart derivatives platforms from getting a foothold in the market.

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