As expected, European Union anti-trust officials have blocked the proposed mega-merger between Deutsche Börse and Nyse Euronext over fears that the deal would stifle competition in the derivatives markets.
Nyse and Deutsche Börse officials have engaged in a frantic last-ditch effort to salvage the deal, lobbying EU officials and world leaders at the Davos Forum last week, but have today conceded defeat.
"Deutsche Boerse and Nyse Euronext have been informed that the European Commission today has decided to prohibit their proposed business combination," the companies said in a statement. "Despite the remedies offered by the companies, the European Commission concluded that the combination would significantly impede effective competition."
European Commission antitrust chief Joaquin Almunia had demanded that Deutsche Börse and Nyse sell either the Eurex derivatives arm or Liffe if they wanted the deal to go ahead, a course of action which neither exchange was prepared to countenance.
Deutsche Börse, which has spent €80 million in project expenses during 2011 to bring about the planned merger, described the decision as a "black day" for Europe and for its future competitiveness on global financial markets.
The proposal by the two exchanges to merge in a $9.5 billion mega-deal last February set off a wave of M&A activity in the exchange trading space, as competing rivals sought to play catch-up. However, political and anti-trust issues intervened to thwart alternative combinations such as those proposed between Singapore and Australia and the London Stock Exchange and Canada's TMX.
Attention will now switch to the London Stock Exchange's proposed takeover of LCH.Clearnet (in which Nyse has expressed an interest) and the bidding war for the London Metal Exchange, as exchange chiefs in New York and Frankfurt revisit their strategic options.