NYX Nyse Euronext

The Securities and Exchange Commission on Wednesday approved the proposed merger of NYSE Euronext (NYX) and Deutsche Boerse AG (DB1.XE, DBOEF), adding to U.S. authorizations of a deal seen likely to be nixed by European Union regulators.

SEC officials approved a raft of rule filings by the NYSE Euronext-owned exchanges, including the New York Stock Exchange and NYSE Amex, as well as the Deutsche Boerse-owned International Securities Exchange, relating to a change in ownership that would see the markets move under a new parent.

The approvals are contingent upon the planned $17 billion combination closing. Investors and analysts now see slim odds of that happening after EU antitrust examiners last week recommended that the body's commissioners block the deal on grounds that it would create a monopoly in European listed futures and options trade. The EU is slated to take up the matter Feb. 1, with a Feb. 9 deadline to turn in a verdict.

A spokesman for NYSE Euronext said Wednesday that the company welcomed the SEC decisions.

In mid-October, exchange rule filings related to changes of ownership were filed by the New York Stock Exchange and its sister markets Amex and Arca, all owned by NYSE Euronext. Options exchange operator ISE submitted a similar rule change, as well as the two stock markets run by Direct Edge Holdings LLC. New York-based ISE is wholly owned by Deutsche Boerse's derivatives unit Eurex, and ISE in turn owns a 31.5% stake in Direct Edge.

All of those exchanges needed the SEC's approval to become subsidiaries of a new parent that would be formed by the Deutsche Boerse-NYSE Euronext merger. Wednesday was the deadline for SEC officials to rule on the matter.

A green light from the SEC follows approvals from other major U.S. regulatory agencies. In August, the U.S. Committee on Foreign Investment in the United States allowed the deal to proceed, and in late December, the U.S. Department of Justice approved it on the condition that the ISE divest its ownership in Direct Edge, which competes directly with the NYSE's stock-trading platforms.

Those blessings will be moot, however, if EU commissioners deem the combination anticompetitive. Such hurdles to the deal have always been accepted as higher in Europe, where together the two exchange groups account for an estimated 93% of business in exchange-traded derivatives. Trading U.S. futures is a small business for NYSE Euronext, and Deutsche Boerse has no U.S.-based platform.

Executives of NYSE Euronext and Deutsche Boerse are now mounting a lobbying effort to convince EU policy makers that the deal will improve regulators' view into trading activity and strengthen the region's voice in global market matters.

NYSE Euronext Chief Executive Duncan Niederauer met with two commissioners Tuesday, and efforts are seen ramping up at the World Economic Forum in Davos, Switzerland, later this month.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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