Brussels opens probe into Deutsche Börse and Nasdaq over derivatives

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The European Commission has opened an investigation into possible collusion between Deutsche Börse and Nasdaq over the listing, trading and clearing of financial derivatives.

The commission is concerned that Deutsche Börse and Nasdaq may have agreed not to compete in the listing, trading and clearing of certain derivatives. Brussels is also worried that they may have allocated demand, co-ordinated prices and exchanged commercially sensitive information.

The probe follows unannounced inspections at Deutsche Börse and Nasdaq in September last year.

“Competition rules help secure fair and open competition among financial exchanges and ensuring the proper functioning of the capital markets union — a cornerstone for innovation, financial stability and growth in the interest of all European citizens,” the EU’s competition chief Teresa Ribera said.

Deutsche Börse is the largest exchange group in the EU by market value, running the Frankfurt Stock Exchange and Eurex, the region’s biggest derivatives trading venue. Nasdaq’s US parent is one of the world’s largest stock exchange groups.

Deutsche Börse Group and Eurex said they noted the commission’s decision to open an investigation into a former co-operation agreement between Eurex and the Finnish derivatives exchange HEX, now part of Nasdaq, and were “engaging constructively”.

They said the formal opening of proceedings was a “procedural step that does not prejudge the outcome” and that the case remained at an early stage.

The co-operation dates back to a 1999 agreement that was discussed with the commission at the time. Deutsche Börse said the partnership had been intended to be “pro-competitive” by “deepening liquidity” in Nordic derivatives markets and creating efficiencies, adding that it had been public and beneficial for market participants.

According to statements from that period, HEX entered into co-operation with Eurex, one of the world’s largest derivatives markets. The most liquid derivatives were traded on the Eurex system, while HEX was responsible for marketing Eurex products and memberships across the Nordic and Baltic countries.

The Helsinki Stock Exchange, then known as HEX, later became part of Nasdaq through the 2003 merger with Sweden’s OM and Nasdaq’s subsequent acquisition of OMX in 2008.

Nasdaq also pointed to the historical co-operation, saying it believed the co-operation was lawful. “It was discussed with the European Commission when it was announced, and no objections were ever raised until after the co-operation had ended.”

Nasdaq added that it was engaging constructively with the commission.