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25 September 2006

Nyse and Euronext look to calm regulatory concerns





The New York Stock Exchange and Euronext would create separate US and European entities to ensure markets on both sides of the Atlantic retain independence should the proposed merger between the stock exchange operators go ahead.

Details of a proposed regulatory structure have been outlined in a joint filing - under the name Nyse Euronext - with the US Securities and Exchange Commission. Euronext's financial statements were restated for the first time using US GAAP accounting procedures in the filing.

In the 750-page document, Nyse and Euronext have responded to increasing concerns about how much power US regulators would have over the Euronext's pan-European business if the deal were to go ahead.

According to the filing, Euronext will have a Dutch foundation for its markets to prevent US regulators from affecting rules for listing stock in European countries. In the same way Nyse will create a three-person Delaware trust to ensure that no European laws affect how US companies are regulated.

The document also describes events leading up to Nyse's bid, including a meeting in January between NYSE CEO John Thain and Jean-Francois Theodore, the head of Euronext, where the two discussed a merger to create 'the first truly global exchange' with broad international reach, diverse product offerings and leading technology.

Euronext shareholders are due to vote on a proposed takeover by the New York Stock Exchange in December. The European exchange agreed a $10 billion - or EUR7.8 bn - deal from Nyse in May, ousting a rival bid by Deutsche Börse.

Although the deal still requires approval from Euronext shareholders, the filing was seen by analysts as a 'significant step' in completing the merger.

The filing follows remarks from German finance minister Peer Steinbrueck that Deutsche Börse should not pursue a merger with Euronext 'at any price'. The German exchange is still hoping to pursue a tie-up with Euronext and some analysts reportedly think the Börse may be prepared to do almost anything to prevent a Nyse/Euronext merger.

In a separate move, earlier this week Massimo Capuano, the chief executive of Borsa Italiana, outlined a EUR21.5bn proposal to merge the Italian market with Euronext and Deutsche Börse to create a pan-European super exchange.

Related Document 750pp


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