An $8 billion exchange merger is in the works that underscores how the global market for derivatives has eclipsed that for stocks.
The owner of the venerable New York Stock Exchange is in talks to be acquired by an upstart commodities and derivatives trading platform, according to people briefed on the matter. The IntercontinentalExchange is expected to offer about $33 a share, with two-thirds of that in stock, one of these people said. That represents a premium of 37 percent to NYSE Euronext's closing stock price on Wednesday.
A deal could be announced as soon as Thursday morning, though these people cautioned that talks may still break down.
While the New York Stock Exchange, with its opening bell and floor traders, has been the public image of a stock market for two centuries, it is NYSE Euronext's businesses in the over-the-counter trading of derivatives - including the Liffe market in London - that appear to be the main attraction in the merger talks.
IntercontinentalExchange, or ICE, was founded in 2000 and is based in Atlanta. It competes fiercely with the CME Group, a derivatives trading powerhouse that owns the Chicago Mercantile Exchange and the Chicago Board of Trade.
More than a year ago, ICE teamed up with the New York exchange's chief rival, the Nasdaq OMX Group, to make a hostile bid for NYSE Euronext. The two had sought to break up their older competitor's plan to merge with Deutsche Börse of Europe, which would have created a powerful trans-Atlantic company with a big market share in the trading of stocks and derivatives.
Under the terms of that deal, valued at about $11 billion, Nasdaq would have taken NYSE Euronext's equities busines s, while ICE would have assumed the derivatives operations.
But the Justice Department threatened to block that joint offer, on the ground that combining NYSE Euronext and Nasdaq would create an overwhelming monopoly in the world of stock trading.
The planned merger of NYSE Euronext and Deutsche Börse itself fell apart early this year after European antitrust regulators opposed the combination, on the ground that it would corner too much of the market in exchange-traded derivatives.
But the newest merger might pose fewer problems because ICE focuses on commodities like oil, natural gas and cotton, while NYSE Euronext plies mainly in stock and stock options and derivatives.
And unlike several proposed mergers, like that of the Singaporean and Australian stock exchanges, which fell apart last year on nationalist concerns, this potential deal would take place between two companies from the same country.
After its deal with Deutsche Börse col lapsed, NYSE Euronext was left to conduct some soul-searching. At the time, the company said that it would most likely look to smaller acquisitions and cost-cutting.
The trading of stocks has become a less attractive business. The New York Stock Exchange is now responsible for only about 11 percent of all stock trading, while NYSE Euronext's electronic Arca platform accounts for another 12 percent, according to industry data.
The average number of American stocks traded each day has fallen every year since 2009, and has continued to decline over the course of 2012, according to statistics from Credit Suisse. The volume of trading in futures and options, where ICE is focused, has also fallen since last year, but less than in stocks.
A tie-up with ICE, however, would link NYSE Euronext to one of the i ndustry's fastest-growing exchanges. ICE has some of the highest profit margins in the business.
It might also reap some of the benefits that have driven a decade-long spree of consolidation among exchanges. Such companies have long sought to gain the greater scale and cost savings that come from combining back-end operations and staff cuts.
Still, the potential merger would sharply expand ICE, which despite its bigger market value is a smaller company. It has a little more than 1,000 employees, while NYSE Euronext has 3,077.
It isn't clear whether other exchanges would seek to break up the proposed transaction. The CME Group is a candidate to express opposition. But the firm appeared to have little appetite in bidding for NYSE Euronext last year, and it may run into antitrust concerns.
Other potential spoilers, including the Hong Kong and Singaporean exchanges, could run into nationalist concerns.
Shares of NYSE Euronext rose more than 21 p ercent in after-hours trading, to $29.20, after The Wall Street Journal reported news of the talks.
Nathaniel Popper contributed reporting.
