Position paper on the proposed merger between Deutsche Börse and NYSE- July 2011

Introduction The FIA While the FIA European Principal Traders Association (“FIA EPTA”) supports the proposed merger of EPTA Deutsche Börse and NYSE Euronext, we believe the competition and regulatory authorities need to supports the mitigate, where possible, the increased market power of the merged entity. We view this merger as a proposed unique opportunity for exchanges, market participants and regulatory authorities to work together to merger of address a number of market inefficiencies and preserve important competitive aspe cts of the Deutsche marketplace. Börse and NYSE The FIA EPTA is a recently formed association of European principal traders 1 under the auspices of the Euronext Futures Industry Association (FIA). The mission of the FIA EPTA is to support transparent, robust and safe markets with a level playing field for all market participants. The FIA EPTA currently consists of 17 principal trading f irms that on a combined basis represent a major part of trading volumes in the various asset classes (derivatives and cash) traded on Deutsche Börse and NYSE Euronext. We believe that our relative market position, as well as the nature of our principal t rading activities, provide a unique perspective on the proposed merger.

FIA EPTA believes that exchange consolidation has the potential to create market efficiencies in pre- and post-trade services as well as technology offerings. In addition, we are of the view that larger exchanges will be better positioned to face the challenges of bringing over-the-counter products onto on-screen execution platforms and into clearing.

...but we The proposed merger between Deutsche Börse and NYSE Euronext, however, will create an exchange would with a near monopoly in European exchange -traded derivatives including a vertical silo structure in pre- welcome a trade (co-location facilities) as well as post-trade serv ices. The combined entity will control 91% of index dialogue on derivatives, 95% of equity derivatives, and 99% of derivatives. 2 a number of competitive We would welcome a dialogue with the relevant competition and regulatory authorities as well as the issues merging entities on a nu mber of issues that arise from the proposed merger, including a competitive central counterparty (“CCP”) environment, fair and reasonable access to and co-location facilities, continuation of IT innovation and an examination of the basis for licensing of indices.

Our thoughts on each of the key issues are set out below.

Cash equities clearing MiFID introduced limited competition between incumbent clearing providers and newly established pan- European clearinghouses has reduced costs and promoted integration of the European cash equity markets. All market participants will benefit from increased competitiveness of CCPs. The FIA EPTA believes the Deutsche Börse and NYSE Euronext merger could provide these benefits to market participants, if executed within a framework that allows for competition. Specifically, the chosen post- trade solution should include:

- Interoperability between a potential future Deutsche Börse and NYSE Euronext CCP and its pan-European competitors, in line with the current drafts of the EMIR proposals and the European code of conduct for clearing and settlement;

1 Principal Traders are firms that primarily trade their own capital in exchange-traded markets. 2 Based on World Federation of Exchange statistics (H1 2011, notional turnover; options and futures market aggregated).

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- Access to the trade feed of the combined entity for competing CCPs that fulfill reasonable requirements based on public regulatory standards; and - Equal and fair access to CSDs for CCPs and participants to ensure safe, reliable settlement between final systems.

Derivatives clearing The benefits of a merged Deutsche Börse and NYSE Euronext clearing business would represent significant benefits for the industry. For example, consolidation of the Liffe and Eurex clearing volumes would result in substantial margin efficiencies for market participants. The FIA EPTA hopes that both the exchanges’ shareholders and market participants will share the significant savings realized by combining the exchanges’ clearing infrastructures.

Coinciding with the move to mandatory clearing for OTC products , market participants will be faced with the consolidation of two major European players, leaving market participants and platforms little choice as to where to have trades cleared. In the context of EMIR, multiple solutions to encourage competition betwee n derivatives CCPs have been discussed. Due to the characteristics of derivatives (long holding periods at the CCP, potentially high margin requirements), interoperability has not been envisaged for derivatives CCPs, like it has been for cash equities. As the legislative review of the EMIR proposal coincides with the merger review , the FIA EPTA would like to engage in a discussion with regulators, legislators and the leadership of the merged entity to identify suitable solutions to mitigate the adverse competitive effects of the merger and ensure efficient competition and fair and open access to the derivatives post-trade infrastructure.

Concentration of index products/licensing The anti-competitive nature of exclusive licensing arrangements for index products is an area that needs to be reviewed. As previously noted, the combination of NYSE Euronext and Deutsche Börse will mean exclusivity for the listing of futures and options for virtually all of the major European index products. The FIA EPTA respec ts the intellectual property rights of index owners; however, we believe that a competitive licensing process should be introduced that allows competitors to use the index licenses on reasonable commercial terms.

Provision of market data The provision of market data is a major revenue source for primary exchanges. Primary exchanges have recently started exerting their control over such reference data with the introduction of additional mandatory data use fees. Deutsche Börse and NYSE Euronext already generate significant revenues from market data fees relative to other providers and venues. Having the largest combined venue for both European equities and listed derivatives will give Deutsche Börse and NYSE Euronext a significant data monopoly post merger. We would therefore endorse measures that ensure that market data: - is provided on a fairly priced and non discriminatory basis; - is available fully unbundled; and - has restrictions in place to prevent charging users multiple times for accessing the same data.

Provision of innovative trading infrastructure Technological innovation by exchanges has brought enormous benefits to all market participants, both in terms of liquidity as well as reduced transaction costs. The merger will cause a shift in focus from much needed innovation towards migration and integration of trading infrastructure. In addition to this, the cost for market participants of migrating to the new trading infrastructure will not be inconsequential; The FIA EPTA would e xpect that the savings from combining trading venues to be passed on to customers.

Although many exchanges provide fair and equal access to co -location facilities, there is a growing trend for exchanges to insource the operation of data centres, thereby c reating potentially undesirable forms of vertical silos. The costs of co-location and network connectivity into these data centres are

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potentially prohibitive for many participants. One example of this trend has been the recent deployment of the NYSE Euronext data centre in Basildon. No third-party vendors are allowed to participate in this facility and it is expensive relative to other co-location facilities. This location is expected to host the Deutsche Börse and NYSE Euronext co-location facility post-merger and would give the exchange monopolistic pricing power. We would urge the various parties involved in this merger to ensure that the pricing of the services offered by facilities such as this are competitive and access is open and fairly allocated.

Conclusion As previously stated, FIA E PTA supports the Deutsche Börse-NYSE Euronext merger if the appropriate steps are taken to address the inefficiencies that currently exist and pave the way for a competitive marketplace. We are very much looking forward to having a constructive dialogue with the European Commission, regulators, and the exchanges involved in the merger.

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