More Scrutiny Against NYSE & Deutsche Boerse Merger (NYX, NDAQ)

The proposed NYSE Euronext, Inc. (NYSE: NYX) merger with Deutsche Bourse may be getting more scrutiny.  The merger has been questionable from the start, even though the Department of Justice in the United States gave a conditional approval if certain divestments were made.  Fox Business News reporter Charlie Gasparino has reported that the proposed merger between the two “has been nixed by European Union regulators.”

Our understanding is that this may not be the final judge, jury, and execution, but this brings just one more international merger closer to not being allowed.  Gasparino noted that the regulators can be petitioned to again and that the exchanges are not currently getting the deal done.

This will not be bad news for the NASDAQ OMX Group Inc. (NASDAQ: NDAQ) because it keeps that electronic exchange from now having to consider any new radical mergers.  Both exchanges have already gone cross-border, so it is not just a sense that the international merger is being blocked.

At the end of the day, and this is just opinion, the blockage of this exchange deal is better for America.  Does it seem right that the heart of America’s stock exchange history should be flown under a German flag, even if the exchange went out of its way to try to show that this would not really have been the case?

Now, for the irony… NYSE Euronext shares are trading higher and by almost 4% to $27.61 against a 52-week trading range of $21.80 to $41.60.

UPDATE 2:00 PM EST: The NYSE Euronext has now responded:

“NYSE Euronext has not yet received any official decision by the European Commission regarding the requested merger of both companies. The Commission has announced that it will make its final ruling on whether to clear the proposed merger by February 9, 2012. As a matter of policy, we cannot comment on speculation.

We have clearly demonstrated to the European Commission the strong benefits that our combination will bring to a broad set of stakeholders in Europe.

The proposed merger aims to create a regulated, highly liquid and integrated European market for stock and derivatives trading as well as clearing and settlement, thereby contributing to the stability, integrity and transparency of the European financial market.

We have also proposed substantial and tangible concessions that address the EC’s competition concerns and further contribute to the creation of a stable, regulated pan-European exchange infrastructure that would ensure Europe’s competitiveness in an increasingly competitive global market, and deliver significant benefits to participants in the real economy.

Under the European Commission’s formal process, any preliminary recommendation by the case team would subsequently be vetted and acted on by the entire European Commission. We look forward to pressing the case for this compelling transaction in that forum.”

JON C. OGG