As expected, Deutsche Boerse and the London Stock Exchange revealed details of their merger today.
The deal would create the largest exchange in Europe, with a market cap close to $30 billion (close to the market cap of Intercontinental Exchange, the owner of the NYSE).
One small surprise: no cash. It's an all-stock deal. LSE shareholders would own 45.6 percent of the combined group while Deutsche Boerse shareholders would own 54.4 percent.
Read MoreThe London Stock Exchange is for sale: Who will get it?
Simply put, politics and regulation are what's really important here, because both of these — if not handled carefully — could derail a deal, no matter who gets the LSE.
Look how carefully this deal was crafted as a "merger of equals:"
- The company will be headquartered in London, but will be run by Carsten Kengeter, CEO of Deutsche Boerse.
- The chairman will be Donald Brydon, LSE Chairman.
- The board will be composed of equal number of directors from both companies.
This is all about soothing concerns that London bankers might somehow lose their pre-eminent position as the financial capital of Europe to (gads!) Frankfurt.
Much of the U.S. brokerage and exchange community is in Boca Raton today at the Futures Industry Association annual meeting. Guess what's on the agenda for this afternoon? A panel on "Exchange Leaders on the Future of Markets." On the panel:
- Christopher Concannon, President & Chief Executive Officer, Bats Global Markets
- Thomas Farley, President, NYSE Group
- Hans-Ole Jochumsen, President, Nasdaq
- Edward Tilly, Chief Executive Officer, Chicago Board Options Exchange
Wonder what they're going to talk about? The need for more consolidation?