Kohlsuppe

19 May 2006 By Mike Verdin

The German exchange wants to run the shop after a merger with its Parisbased rival. But it isn t prepared to pay up for the privilege. That may not be sufficient now that Nasdaq has given NYSE an extra incentive to snatch Euronext from under its nose.

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Deutsche Boerse, the German exchange, proposed a merger of partners with Euronext, its Parisbased peer.

The merged exchange would have its headquarters in Frankfurt, where its IT operations and part of the derivatives business would be based. The rest of the derivatives operations would be based in London. Cash equity trading and listing operations would be run by local exchanges, overseen by a Paris office.

Euronext and Deutsche Boerse would have an equal number of seats on the combined group's supervisory and executive boards. Deutsche Boerse would appoint the chairman of the supervisory board, who would have the casting vote. Reto Francioni, Deutsche Boerse's chief executive, would be chief executive of the combined group after a period of transition in which he would share the post with JeanFrancois Theodore, Euronext's chief executive.

In a separate announcement, Nasdaq said that it had bought 2.1m shares in London Stock Exchange at an average price of 1235.5p per share, taking its stake to 25.1%.

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