NASDAQ OMX Group Inc and IntercontinentalExchange Inc abandon their proposed acquisition of NYSE Euronext

26 May 2011

The Justice department said that the acquisition would have substantially eliminated competition for corporate stock listing services, opening and closing stock auction services, off-exchange stock trade reporting services and real-time proprietary equity data products.

The NASDAQ OMX Group Inc and IntercontinentalExchange Inc abandoned their joint bid to acquire NYSE Euronext after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the deal.

 

"The companies’ decision to abandon their bid for NYSE Euronext eliminates the competitive concerns developed during our investigation", said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The acquisition would have removed incentives for competitive pricing, high quality of service, and innovation in the listing, trading and data services these exchange operators provide to the investing public and to new and established companies that need access to US stock markets."

 

The department’s investigation revealed that NYSE and NASDAQ are the only competitors in several businesses vital to the success of US equity markets. NYSE and NASDAQ compete aggressively for listing customers, as they are effectively the only companies providing corporate stock listing services in the United States. In order for a company to sell its stock to investors on a public exchange in the United States, the company must first “list” or register its shares with an exchange. Once listed, the company’s stock can be bought or sold on any stock exchange in the United States, off-exchange at certain broker-dealers and on licensed alternative trading systems. Listing stock exchanges act as “gatekeepers” to public equity markets, allowing only certain companies that meet rigorous standards to list and attract investment capital from the public.  

 

NYSE and NASDAQ are also the only two providers of stock auction services that are used every day at the open and close of trading, as well as at certain other times of market imbalance, the department said.  

 

NYSE and NASDAQ provide trade reporting facilities for the reporting of stock trades occurring outside a stock exchange, and are currently the only two entities that compete to collect this data. This reporting business is vital for the proper dissemination of information about off-exchange trading, which today accounts for roughly 30 percent of all stock trading in the United States, the department said.

 

NASDAQ and NYSE are the largest two competitors providing certain real-time proprietary equity data products. 

 

Press release