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March 2, 2012

NYSE Resumes Buyback Program

By James Armstrong

NYSE Euronext is resumed its $550 million stock repurchase program following a move by European regulators that put the final kibosh on plans for the exchange company to merge with Deutsche Boerse Group.

Both NYSE and Deutsche Boerse agreed to terminate their merger agreement in light of the European Commission's decision to prohibit the companies from combining, a move that contrasted sharply with the friendly attitude toward the merger taken by U.S. regulators.

Though the exchanges had put forth a number of remedies to alleviate anti-trust concerns, the European Commission found the proposed merger would have resulted in a quasi-monopoly in the area of European financial derivatives traded globally on exchanges. Together, NYSE and Deutsche Boerse control more than 90 percent of the trade in European financial derivatives.

Both exchange companies immediately lashed out against the decision. Jan-Michiel Hessels, chairman of NYSE Euronext, said he strongly disagreed with the ruling, and the executive board of Deutsche Boerse issued a statement calling it "a black day for Europe and for its future competitiveness on global financial markets."

In the wake of the decision, however, NYSE immediately moved to resume its stock buyback program, which was authorized in 2008 but was put on hold during the merger negotiations.

Repurchases of shares were scheduled to commence after the release of NYSE's year-end results on Feb. 10. Duncan Niederauer, chief executive officer of NYSE Euronext, said the company had a strong year in 2011, giving it the opportunity to return more capital to shareholders.

"I'm extremely proud of the efforts of the entire NYSE Euronext team over the last year," Niederauer said in a statement. "While we viewed the merger as a way to accelerate our plans, our existing business model was always central to our strategy."


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