NYX Nyse Euronext

The head of NYSE Euronext (NYX) said Monday he remained confident it would secure its planned merger with Deutsche Boerse AG (DB1.XE, DBOEF).

Duncan Niederauer, chief executive, also suggested the exchange operator's board was unwavering about not holding talks with Nasdaq OMX Group Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE), which launched their own hostile offer for the Big Board operator on Monday.

"The strategy is too compelling," Niederauer said of the Deutsche Boerse plan announced in January, and subsequently enhanced with the promise of larger synergies, though its value still trails that of Nasdaq and ICE.

"The investors all understand that," Niederauer told Dow Jones on the sidelines of the Milken Global Institute conference in Los Angeles. He brushed off calls made by some shareholders at the company's annual meeting last week for the board to hold talks with the rival suitors. He said the meeting "was everything we could have hoped for.

"That was my takeaway from [last] Thursday," he said.

Niederauer also said the exchange industry had become increasingly nationalistic, and called Australian Treasurer Wayne Swan "terribly courageous" for effectively blocking the planned merger between Singapore Exchange Ltd. (S68.SG) and ASX Ltd. (ASX.AU) in an effort to protect the country's capital markets.

His comments came after a spirited panel discussion on U.S. market regulation, during which Niederauer called NYSE Euronext assets "a national treasure."

Heading into the one-year anniversary of the May 6 flash crash, he also reawakened some of the animosity seen between NYSE and Nasdaq in the wake of the market meltdown, when leaders of both exchanges engaged in finger-pointing about blame. "This is an easy problem for the market to solve," Niederauer said Monday, suggesting agreement couldn't be reached within the industry, thus avoiding the welter of subsequent moves by regulators.

"But that would have required everyone admitting that for once the dinosaurs got it right," he continued, equating NYSE Euronext with that now-extinct reptiles.

Niederauer said the flash crash had "shredded the confidence" of retail investors, who have yet to return to the market in the numbers seen prior to last May's market turmoil.

NYSE Euronext's planned combination with Deutsche Boerse would create the world's largest exchange company by revenue, melding transatlantic derivatives and cash equities trading alongside a technology business and its nascent over-the-counter derivatives operation. Nasdaq and ICE want to split the business, with the former taking cash equities and options.

Niederauer said some may be surprised that he doesn't favor mandatory trading of all OTC products, though he said "it would make a lot of sense" for the company to become involved in the reporting of transactions, as well as their clearing. "Clear as much as you can, report as much as you can...I'm not sure what [mandatory] trading would achieve."

-By Doug Cameron, Dow Jones Newswires; +312 731 6910; doug.cameron@dowjones.com

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