When I first heard of the Nasdaq OMX/Intercontinental Exchange (ICE) counteroffer for the NYSE Euronext, which has a merger agreement in place with Deutsche Börse, my first thought was that it could not stand up to a Department of Justice review. You are talking about the two biggest stock markets in the United States that account for all or nearly all of new offerings.

I remember arguing with a colleague that merging the two largest U.S. stock exchanges would not be allowed. We talked about the Chicago Mercantile Exchange acquisition of the Chicago Board of Trade and how some folks thought it could be held up by antitrust concerns. I recall that the CME and CBOT’s argument was that they did not compete against each other directly as the CME’s main products were short-term interest rates, equity indexes and meats while the CBOT concentrated on long-term interest rates and grains. Obviously that is an argument that could not be made with a Nasdaq and NYSE hook-up.

(more…)