Greifeld: I Feel Your Pain
February 1, 2012
The chief executive of Nasdaq OMX Group said he empathisizes with the frustration of NYSE Euronext chief executive Duncan Niederauer and Deutsche Boerse chief Reto Francioni to get regulatory approval to merge their companies.
“The first thing you have to say with respect to the failed transaction is that we here at Nasdaq OMX is certainly empathetic to the feelings of the management teams of both Deutsche Boerse and NYSE,’’ Nasdaq OMX chief Robert Greifeld, in the firm’s fourth quarter earnings conference with analysts.
Last year, Nasdaq OMX and Intercontinental Exchange staged a hostile takeover of NYSE Euronext. Nasdaq OMX would have kept the stock market operations, ICE the derivatives operations.
Greifeld
The U.S. Justice Department blocked progress on the deal, signaling that it would not approve the merger of the two largest stock markets in the United States.
“It wasn't too long ago that [ICE chief] Jeff Sprecher, myself and the management teams from ICE and NASDAQ, obviously, failed,’’ Greifeld said. “And we had to go through really a painful moment full of frustration and a dominant feeling of not having your arguments understood.’’
He said each merger failed to accomplish its goal of defining the market involved in a way that regulators could grasp and support.
“Any time you're trying to complete a merger where the number of competitors is low or the market share is high, your success will hinge on whether you can broaden the definition of the market,’’ he said. “In our situation, we attempted to define capital raising and the public listing market, in global terms.’’
He pointed to the listings of such brand-name public companies as Samsonite and Prada outside their home markets, in support of the broader definition.
In the Deutsche Boerse-NYSE Euronext case, the two parties tried to establish that derivatives trading and clearing should be defined in global terms. That would have made the relevant competitor CME Group, based in Chicago and the operator of the world’s most diverse derivatives marketplace.
But the European Union blocked the merger on the grounds that the combined firm would control 90 percent of the European derivatives market.
“Now we recovered, ICE has recovered,’’ he said. “And I'm sure that Reto and Duncan and their teams are formidable competitors and will recover from this setback.”
