NYSE, Euronext deal is likely

Deutsche Boerse, Europe’s biggest stock market, on Wednesday dropped its $10-billion bid to acquire the Euronext stock exchange, clearing the way for New York Stock Exchange Chief Executive John Thain to complete a $13-billion combination with Euronext.

The combination of NYSE Group Inc. and Euronext is now almost certain to be approved when shareholders vote next month. But also likely is that a spurned Deutsche Boerse will redouble efforts to expand in Europe -- and the world’s other exchanges will be searching for their own avenues of expansion.

Then there are the new rivals for a share of the global equities market. Seven major global investment banks announced a plan Wednesday to form a Pan-European exchange for equities. The banks include Citigroup Inc., Credit Suisse Group, Deutsche Bank, Goldman Sachs Group Inc., Merrill Lynch & Co., Morgan Stanley and UBS.

“The NYSE is going to see competition coming at them from all angles,” said Octavio Marenzi, chief executive of financial consulting firm Celent.

If Europe is to be the battleground, there are already a number of other players to fend off any Big Board dominance. Deutsche Boerse could again pursue the London Stock Exchange, which has rebuffed several previous offers. Nasdaq Stock Market Inc., which owns a 25% stake in the London exchange, is also seen as making a bid.

If successful, the investment banks might even expand their exchange into the NYSE’s own turf, setting up operations in the U.S. Analysts say continued consolidation will make it difficult for the NYSE to become globally dominant.

But investors are optimistic: NYSE Group shares jumped $2.67 to a record high of $95.70 Wednesday.