DB Shifts Focus

Terry Flanagan

The operator of the Frankfurt Stock Exchange will turn its focus on alternative avenues of growth going forward.

Following the failure of its high-profile megamerger with NYSE Euronext, Deutsche Borse will instead turn toward organic growth, including a push into technology and unregulated markets.

“I am sure it will not come as a surprise to you that, in the light of a shift in the competition authorities’ position away from a global and toward a regional market view, we are not focusing on large-scale mergers and takeovers,” said Reto Francioni, chief executive officer of Deutsche Borse in a conference call with reporters. “We will further scale up spending on growth initiatives and infrastructure in 2012.”

One of its new initiatives will be toward one of its biggest strengths, Eurex. The derivatives trading platform last week introduced a new suite of equity options on 17 shares, completing its lineup of equity options on MDAX mid-cap index companies. An additional 17 equity options based on companies of the technology-centric TecDAX index will follow on Feb. 24.

“Some of our members are asking us to extend our offering in the mid-cap segment – both for institutional investors as well as for retail clients,” Heiner Seidel, a Deutsche Borse spokesperson, told Markets Media. “This is a major market improvement as all of trading in the new listed options is currently off-exchange.”

This follows in the footsteps of its counterpart in its downed merger, NYSE Euronext, also proclaiming a shift away from large M&A deals and toward smaller, bolt-on acquisitions and in technology and clearing.

That thinking comes as exchange executives have noted the increasing difficulty in getting large, cross-border mergers approved. With virtually all of the major exchange deals from the past 12 months scuttled, whether due to regulation or lack of shareholder support, it appears likely that the days of cross-border mega mergers are numbered. Regulators have made it clear that they would put potential deals under the microscope and pay particular attention on the effects they would have on competitive balance.

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