From the March 01, 2011 issue of Futures Magazine • Subscribe!

Mega exchange on horizon?

Oktoberfest a holiday?

As exchanges around the world pair up as if it were the high school prom, traders and investors are wondering about the timing of the announcements as well as what’s in the mergers for them.

Deutsche Börse (DB) and NYSE Euronext announced a merger agreement in February that would create a mega exchange company with a market cap of more about $24 billion just days after the London Stock Exchange Group PLC (LSE) and the TMX Group, operators of the Montreal and Toronto exchanges, announced a merger of equals.

The DB/NYSE merger is expected to be completed by the end of 2011. At that time, DB shareholders will control 60% of the company and NYSE will control the remaining 40%. Dual headquarters will be established in Frankfurt and New York.

The combined entity would include 15 exchanges, four clearinghouses and would have produced revenue of €4.05 billion ($5.4 billion) in 2010. It would create the largest exchange for stocks and derivatives in the world.

Both mergers have been approved by the respective boards of directors and are awaiting regulatory and shareholder approval.

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