NYX Nyse Euronext

The process of integrating the trading systems of merger partners Deutsche Boerse AG (DB1.XE, DBOEF) and NYSE Euronext (NYX) could take as long as three years but will bring substantial cost savings for customers of the exchange groups, a senior NYSE Euronext executive said.

The wide-ranging technology revamp, eventually covering all the U.S. and European markets run by the combined company, will offer a single point of entry to all platforms and cut down on firms' expense of maintaining separate connections and risk-monitoring systems for disparate exchanges, said Garry Jones, global head of derivatives for NYSE Euronext.

"One bank customer told me that the biggest savings [as a result of the deal] would come from a move to a single technology platform," Jones said in an interview.

NYSE Euronext and Deutsche Boerse agreed in February to merge, creating a new monolith in share-listings and the world's busiest futures market overall.

To promote support among banks and other big customers--some of whom have voiced concerns about the enlarged exchange's sway over trading fees--NYSE and Deutsche Boerse have emphasized savings to customers as a product of the deal. By merging clearinghouses handling the two companies' European derivatives markets, firms ought to see their total collateral levels fall by about $4 billion, executives have said.

Jones suggested that the technology revamp, which he said may take 18 to 36 months to complete, could be just as significant for some customers.

This month, the exchange groups' deal entered the final stages of a lengthy regulatory review by European competition authorities, who are set to rule on the pact by mid-December. Last week, regulators outlined objections to the merger, which Deutsche Boerse and NYSE will seek to negotiate.

Beyond combining platforms, the exchanges are considering other ways to compete with a slate of new, rival markets targeting European derivatives trading, and Jones said there are further chances for trading to be done more efficiently.

One idea on the table is to group together the collateral held against customers' bond and repo deals with the collateral held against corresponding futures positions, Jones said.

The concept has been put in play in the U.S. by NYSE Euronext, which this year introduced a new clearinghouse with the Depository Trust & Clearing Corp. that lets customers hold collateral against Treasurys and futures on Treasury yields in one place, intended to reduce the overall amount of cash required to do business in the markets.

-By Jacob Bunge, Dow Jones Newswires; Jacob.bunge@dowjones.com

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