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Boards Approve NYSE-Deutsche Boerse Merger

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Boards Approve NYSE-Deutsche Boerse Merger

Business

Boards Approve NYSE-Deutsche Boerse Merger

Boards Approve NYSE-Deutsche Boerse Merger

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  • <iframe src="https://www.npr.org/player/embed/133785376/133785356" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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It's official: Deutsche Boerse and the company that owns the New York Stock Exchange intend to merge. Both companies' boards approved the deal Tuesday. The merger will create the world's largest collection of exchanges for stock and futures trading.

MICHELE NORRIS, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

The company that operates the New York Stock Exchange made it official today -it is merging with Deutsche Boerse, the owner of Germany's biggest exchange. The new company will dominate trading in Europe, with markets in five countries there, plus the U.S.

As NPR's Jim Zarroli reports, officials with the New York Stock Exchange say just don't call it a takeover.

JIM ZARROLI: There was plenty of joking today about the deal. Would the new exchange be called the Big Boerse? Would traders in New York now get to take off for Oktoberfest?

But the NYSE's Duncan Niederauer sounded a serious note, calling it a historic deal. He said both partners had tried hard to maintain a position of strength in a fast-changing industry.

Mr. DUNCAN NIEDERAUER (CEO, NYSE Euronext): I think today's announcement represents the next step in this journey for both of us, which will now be a shared one, to reinvent the industry and redefine what it means to be an exchange in the 21st century, which is what we tell our people here all the time.

ZARROLI: What's happened is an explosion of technological change that has created a lot of new electronic trading platforms. These new platforms have forced the traditional stock exchanges to change the way they do business. Outside the New York Stock Exchange today, some people almost shrugged off the merger.

The days when stocks were traded by shouting men on the exchange floor are over, said Paul Sagawa, who works on Wall Street.

Mr. PAUL SAGAWA (Wall Street Research Analyst): More and more, that's being done, you know, machine to machine and whether that computer is located in New York City, in, you know, Frankfurt, the trades are going to get made between people who want to execute them.

ZARROLI: Still, some people expressed sadness about the coming changes. The iconic New York Stock Exchange will be owned by a German company incorporated in the Netherlands.

The NYSE's Niederauer today scolded reporters who have referred to this deal as a takeover.

Mr. NIEDERAUER: Right now the NYSE Euronext board is quite global, so is the Deutsche Boerse board. Both executive teams are quite global today. This is not like a U.S. and a German company are getting together.

ZARROLI: Niederauer noted that Deutsche Boerse is bigger than the NYSE's parent company, so it makes sense that the German company's shareholders will own a bigger chunk of the new operation. But he noted, those shareholders come from all over, including the United States.

James Angel, associate professor of finance at Georgetown University, pointed out that many of those shareholders are large institutional investors like mutual funds that have interests all over the world. But Angel said time will tell whether this is a merger or a takeover.

Professor JAMES ANGEL (Finance, Georgetown University): There is a lot of talk about mergers of equals. But usually when that happens, sooner or later, one side of the organization tends to dominate. It remains to be seen who will dominate in this merger.

ZARROLI: The fact that the new company will be so global is one reason that regulatory approval will be so complicated. It will have trading operations throughout Europe and the United States. And so a number of regulatory bodies will have to sign off on the deal.

NYSE officials said today that they were confident the merger would be approved eventually, although Niederhauer said the process could take longer in Europe. One question that could prove politically sensitive is what to call the new company. Officials say they haven't yet decided.

Jim Zarroli, NPR News.

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