The German exchange warned that the presence of too many clearing houses in Europe will push up costs, creating inefficiencies for the European trading community. The comments come after the proposed merger with transatlantic rival NYSE Euronext raised fears of a behemoth European exchange, offering trading, clearing and settlement services. The combined entity would be responsible for more than 95% of trading in European-listed derivatives, through Deutsche Börse’s Eurex business and NYSE Euronext's Liffe market, including the entire yield curve of the fixed income market.
Deutsche Börse has a deep pool of liquidity in derivatives such as those based on the Stoxx Index, which it jointly owns with the Six Swiss Exchange and which only Eurex has a licence to clear. The merger raises the prospect of other contracts, including those licensed by Liffe, only being cleared by Eurex, creating an effective monopoly and the possibility of higher costs for traders. One senior European clearing executive said the exchange would “really struggle” to get the approval of European regulators in view of its domination of the derivatives market.
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