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ECONOMY

Deutsche Börse must sell holdings for merger

The US Justice Department has declared that Deutsche Börse must sell its stake in smaller exchange operator to gain approval for its merger with the New York Stock Exchange.

Published: 23 December 2011 09:26 CET
Deutsche Börse must sell holdings for merger
Photo: DPA

The department said Deutsche Börse has to divest the 31.5 percent stake that a subsidiary holds in Direct Edge Holdings, the fourth largest exchange operator in the United States.

Doing so would help maintain competition in the sector and earn US approval of the mega-merger, it said.

The Justice department proposed that Deutsche Börse dispose of the Direct Edge interest within two years.

The divestiture would “resolve the department’s concerns about the merger’s effects on the markets for US equities exchange products and services,” the department said in a statement.

“The remedy ensures that participants … will continue to receive the full benefits of robust competition in the form of competitive prices and increased innovation,” said acting assistant US attorney general Sharis Pozen.

Both Deutsche Börse and NYSE Euronext, the operator of the New York exchange, would also have to commit to staying out of Direct Edge operations before the shareholding is divested.

“We are very pleased to have received the approval of the DOJ, an important milestone on our path to completing our compelling trans-Atlantic combination,” said Duncan Niederauer, NYSE Euronext’s chief executive.

The proposed deal brought closer the mega-merger of the two exchanges first announced on February 15, which would create the world’s biggest exchange by revenues and a powerhouse in derivatives trading.

In November the two firms submitted a similar divestiture plan to European regulators to gain their approval for the merger.

The two told the European Commission that NYSE Euronext would give up the main parts of its pan-European single equity derivatives business to eliminate business overlaps with Deutsche Börse that would reduce competition in the business.

They also undertook to ensure third-party access to the Eurex Clearing joint clearing house for European interest rate and equity index derivatives that they have planned.

The Justice Department said it had “communicated extensively” with its EU counterparts to investigate the proposed deal.

The Local/AFP

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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