February 23, 2011 / 6:08 PM / 8 years ago

Regulator says "to defend" Frankfurt in NYSE deal

FRANKFURT (Reuters) - The Hessian Ministry of Economics, which controls Deutsche Boerse’s operating license, says it will use “adequate means” to defend Frankfurt’s interests as a financial center in the proposed merger deal with NYSE Euronext.

Dieter Posch, the minister for economics in the state of Hessen, said on Wednesday he would scrutinize the details of the proposed agreement filed with the U.S. Securities and Exchange Commission last week, which suggest that some sweeteners offered to Germany in the proposed division of power could be watered down as soon as 2016.

“Both parties need to profit equally in a merger,” Posch said in a statement released after a meeting with Deutsche Boerse’s labor representatives on Wednesday.

The NYSE Euronext deal should amount to “development and not a regression” for Frankfurt as a financial center, the statement said.

Under the proposed deal outlined last week Frankfurt will remain the hub for derivatives trading, market data and analytics, while New York will head up cash trading and listings, as part of a so-called “dual headquarter” concept with New York.

Deutsche Boerse’s shareholders are set to control 60 percent of the new company and Deutsche Boerse chief executive Reto Francioni will assume the role of chairman, while Duncan Niederauer, currently head of NYSE Euronext, will become chief executive of the combined company.

As chairman Francioni will have the power to call board meetings, set the agenda and be responsible for initiating and developing overall group strategy.

But according to a document filed with the SEC on February 15, New York could over time emerge as the main center for decision-making.

After an initial term which is set to end in 2016, the chairman’s role will become that of a non-executive director, and the “responsibilities and authorities” that previously went with the position, “will terminate,” says the filing.

Even the link between the chairman’s office and Frankfurt — an extremely sensitive point for politicians in the region of Hessen — has not been set in stone.

Reporting by Edward Taylor; Editing by Greg Mahlich

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