* Euronext, operator of Paris, Brussels exchange on the
* Boerse gives up plans for pan-European stock exchange
* Margin pressure on stocks diminish prospects of a deal
By Edward Taylor and Andreas Kröner
FRANKFURT, Jan 9 Germany's Deutsche Boerse
has lost its appetite for buying Euronext, the
operator of the Paris stock exchange which is back on the block,
three people familiar with the Frankfurt-based company's
thinking told Reuters.
Deutsche Boerse is giving up on its decades-long dream of
consolidating European stock exchanges because regulatory and
technological changes have made it harder to earn big profits
from stock trading, the sources said.
"The attractiveness of the shares trading business has
massively diminished," a high ranking Deutsche Boerse manager,
who declined to be named, told Reuters.
Deutsche Boerse declined to comment.
Euronext is being spun off from NYSE Euronext after rival
IntercontinentalExchange (ICE) made a bid for the
operator of the New York Stock Exchange.
ICE wants to combine its derivatives business with NYSE
Euronext's derivatives exchange Liffe, the jewel in its crown.
ICE said it will try to spin off Euronext, the share trading
arm, leading to speculation that Deutsche Boerse might be
Since 2003 Deutsche Boerse has made three attempts at
combining with Euronext - which also runs the Amsterdam,
Brussels and Lisbon stock exchanges. The final attempt at a
takeover, made in 2011, was shot down by antitrust concerns over
creating a dominant player in derivatives.
Deutsche Boerse's first attempts to join up with Euronext
were made in 2003-4, and in 2006, before share trading came
under pressure from the introduction of the European Union's
markets in financial instruments directive (Mifid) in 2007.
Mifid removed an obligation to trade shares only on
regulated exchanges, making it easier for non-exchange
competitors like banks and alternative investment businesses to
muscle in on Deutsche Boerse's market share.
In 2011 Deutsche Boerse made another attempt at joining up
with NYSE Euronext, but this time because it wanted access to
its derivatives market Liffe. The deal was blocked by European
Union antitrust regulators.
Each time Deutsche Boerse attempted to join with Euronext,
managers at both companies saw the greatest potential from
combining Deutsche Boerse's Eurex derivatives platform with the
London-based Liffe futures and options exchange.
Profits from share trading have come under pressure during
the past decade after advances in information technology lowered
the barriers to enter into the stocks trading business, which
has spawned alternative platforms like Turquoise and Chi-X.
Share trading currently makes up only 10 percent of Deutsche
Boerse's earnings before interest and taxes (EBIT).
By contrast, Europe's top futures markets have been able to
see off competition because of the proprietary nature of the
underlying futures contracts and the closed nature of the
exchanges' futures clearing houses.