25 October 2006

Euronext calls on London to support Nyse deal

Faced with mounting political opposition in Europe to its planned merger with Nyse, Euronext is calling on London's financial community to support the transatlantic deal rather than a tie-up with Deutsche Börse.

According to a Financial times report, Hugh Freedberg, CEO of Euronext's London's derivatives exchange Liffe, has called on London's financial community to back the American deal and has warned that a merger with Deutsche Börse would see 'an exodus of jobs' to Frankfurt.

He says up to 5000 City of London jobs could be lost if the Deutsche Börse proposal goes through because the derivatives business would be relocated to Frankfurt.

By contrast, Freedberg says a Euronext/Nyse merge would strengthen Liffe because the US exchange has no derivatives business of its own in London, says the report.

However a Deutsche Börse spokesperson denied that the exchange intended to relocate Liffe to Frankfurt. The German exchange has said that under its planned merger with Euronext a combined derivatives business would be based in London and Frankfurt, although it would use the technology of its Eurex futures exchange.

Freedberg's comments follow remarks made by French Finance Minister Thierry Breton who says he supported a report by Paris Europlace, a lobby group of the biggest French firms, which called for Euronext to pursue mergers with rival exchanges in Germany and Italy as well as the US. French President Jacques Chirac has also said he supports a 'European solution' for Euronext.

Euronext agreed a $10 billion - or EUR7.8 bn - deal from Nyse in May, after rejecting a rival offer by Deutsche Börse. Euronext shareholders are due to vote on the proposed Nyse takeover in December.

But Deutsche Börse in intent on pursuing a meger with pan-European exchange and said earlier this month that it had signed a letter of intent with Italian stock exchange operator Borsa Italiana 'aimed at creating a federal European exchange that includes Euronext'.

© finextra