IntercontinentalExchange (ICE) reported Monday that it is one step closer to completing its $8.2 billion acquisition of the New York Stock Exchange (NYSE) following “unconditional approval” from the European Commission. The deal is still subject to final approval from the Euronext College of Regulators, the U.S. Securities and Exchange Commission and other national financial regulators.
“The commission’s investigation confirmed that the proposed transaction would not raise competition concerns as [NYSE] and ICE are not direct competitors in the markets concerned and would continue to face competition from a number of other competitors,” the European Commission said in its decision.
The commission examined closely the matter of market competition for trading and clearing services for certain exchange traded derivatives (ETD), in particular agricultural (canola and rapeseed) and soft commodities (cocoa, coffee, sugar) derivatives and U.S. equity index derivatives.
Commissioners found that the “proposed transaction would not raise competition concerns in any of these fields, as [NYSE] and ICE are offering contracts belonging to different product markets so their activities do not overlap. Moreover, the market investigation revealed that they do not exert a greater potential competitive threat on each other compared to other exchanges. Any anticompetitive effects can therefore be excluded.”
In examining minor overlaps of the activities of the two companies in the fields of agricultural ETDs (barley, corn and milling wheat), foreign exchange derivatives and bond trading, the commission concluded that no competition concerns would arise in view of the limited presence of NYSE and ICE in these markets and/or the existence of other strong players.
The commission also found no competition concerns regarding the vertical relationships between trading and clearing of derivatives, nor exchange connectivity services and front-end trade execution services.
“We will continue to work with the relevant national regulators during the process of reviewing and completing the transaction,” said ICE CEO Jeffrey C. Sprecher.
First announced in December 2012 (see Daily GPI, Dec. 21, 2012), ICE heralded the acquisition as creating a “premier global exchange operator” diversified across markets including agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates. Unanimously approved by the boards of both companies, the transaction last December was valued at $33.12 per NYSE Euronext share, or a total of about $8.2 billion, based on the closing price of ICE’s stock on Dec. 19.
Last December Sprecher said the deal was in response to “the evolution of market infrastructure today” and that it would offer a range of growth opportunities while enhancing competition in U.S. and European markets and broadening ICE’s ability to address new markets and offer innovative products and services on a global platform.
ICE has said it is committed to preserving the NYSE Euronext brand and would maintain dual headquarters in Atlanta and New York. New York headquarters would be located in the Wall Street building, home to the iconic NYSE trading floor, which the exchange said would see little change once the deal is consummated.
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