Following the overwhelming shareholder approval from Euronext and New York Stock Exchange (NYSE) of a proposed "merger of equals," FO Week's Elliott Aykroyd and Jim Kharouf take a look at the implications of the deal for both firms and for the wider derivatives industry
Before the votes were cast in mid-December to approve or
reject the merger of two of the world's most prestigious
exchanges, many were critical of the deal. Some of the general
reasons for that cynicism were both political and financial,
but within the derivatives industry itself, while most
acknowledged the potential in the tie-up, there remained fear
based in a number of perceived logistical difficulties.
While the almost unanimous backing of shareholders of both
firms undoubtedly adds credibility to the deal, neither firm
has outlined plans for new contracts, nor completely allayed
concerns over competition and regulation.
One veteran derivatives expert explains that Euronext sees NYSE
as a deliverer of an access route into the North American
market of all the big derivatives contracts which Connect can
deliver. While neither exchange has said what sort of
derivatives products will be devised, equity-related contracts
would seem to make a great deal of sense. Both Euronext Liffe
and Eurex experienced significant growth in equity-related
products in 2006 so the sector is popular at a time when
Euronext Liffe could be about to gain access to one of the
world's largest equity markets.
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