New York and Frankfurt link

THE owners of the New York and Frankfurt stock exchanges yesterday unveiled details of their plan to create the world's largest stock market operator.

NYSE Euronext and Deutsche Boerse last week revealed that they were in advanced talks to bring together their operations, just hours after the London Stock Exchange announced its was buying Canada's TMX Group.

Deutsche Boerse shareholders will own 60 per cent of the new company - which will have joint headquarters in New York and Frankfurt - while NYSE investors will hold the remaining stake.

The new company will have a single-tier board, with ten seats out of 17 going to Deutsche Boerse but, as previously revealed, the head of NYSE, Duncan Niederauer, will take the all-important chief executive's post, with Reto Francioni of Deutsche Boerse becoming chairman.

Under the terms of the deal, NYSE Euronext stock will be exchanged for 0.47 shares in the new company, while Deutsche Boerse shares will be swapped on a one-for-one basis.

The exchanges face intense competition in their traditional stock-trading businesses from younger venues geared towards high-speed electronic traders. The deal creates an unprecedented exchange powerhouse with more than $20 trillion (12.4tn) in trading volume.

The pair promised the takeover would cut combined costs by €300 million (251m) a year. The companies' combined market cap is about $26 billion.

Together, Deutsche Boerse's Eurex unit and NYSE Euronext's London-based Liffe unit would dominate European exchange-based futures trading, with more than 90 per cent overall, raising competition questions.