MERGING two manufacturing companies by bringing together and stripping out aspects of the production line is relatively straightforward. This is far from the case when it comes to combining stock markets.

In the case of Euronext and the NYSE, in an ideal world dealers in Europe and New York would be able to buy shares in Citigroup or BNP Paribas, according to taste, and the place where such companies were domiciled would be irrelevant — they would both be quoted on one unitary market.

This is the eventual goal in any merger of exchanges, but it is a long way off. Euronext is itself the combination of four national bourses — Paris, Lisbon, Amsterdam and Brussels — as well as Liffe, the London financial futures market. But all four are run separately, if under the same ownership.

The reason why exchanges cannot simply pool the share dealings and the liquidity on their respective markets is principally down to differing standards of regulation.

The NYSE, if its bid is successful, has come up with a clever halfway house. It will be adopting the successful Connect trading platform developed by Liffe and used by Euronext. This shared platform will provide some of the $375 million (£199 million) in cost savings identified by the NYSE. It will also allow the bigger firms quoted in New York to be bought on that platform by European investors, paying in euros and trading in European time before New York is even awake.

This offers the chance to increase the liquidity in such US stocks by introducing new investors to the market. But, significantly, a reciprocal arrangement whereby American investors can buy European stocks quoted on Euronext’s four markets is not available. This would be impossible under the much more restrictive SarbanesOxley regulatory environment that governs trading in New York.

The NYSE says that such an arrangement, which would, indeed, resemble a true merger of exchanges, may be possible one day and is the long-term goal. But no one is saying when.

The Euronext board will be keen that the New York offer is successful and shuts out the threat of a “merger” with Deutsche Börse, which, under the conditions set out by the Frankfurt exchange last week, more resembles a German takover.

The NYSE offer is couched as a merger of equals, and the two businesses are similar in terms of market capitalisaton. Advisers were keen to insist that the terms on offer, which equate to about €74 a share, are ahead of the €64 that can be deduced as the value of any Börse offer. This would be based on the two businesses’ average market capitalisations over a three-month period. They were also pointing out that those cost savings outstripped the €250 million (£170 million) synergies indicated by the Germans as available from a Euronext-Frankfurt tie-up.

For London, the prospect of a transatlantic tie-up between two of its greatest rivals, however limited, brings closer the prospect of a purchase by Nasdaq, which already has a quarter of the LSE, however much Clara Furse, the latter’s chief executive, may champion the cause of independence.

THE FOUR AMIGOS, OR THE FOUR BIG EGOS?

John Thain, the chief executive of NYSE since 2004, will head the merged entity. A former president and chief operating officer of Goldman Sachs, he aroused controversy last year on the involvement of Goldmans in the deal to merge the NYSE with Archipelago, the electronic trading platform. Goldman was one of the founding shareholders of Archipelago and Thain had championed a programme to invest in the company. Thain, 50, studied electrical engineering at MIT before gaining an MBA from Harvard.

Jean-François Théodore cultivates a rumpled Gallic charm, but he is a typical product of the French establishment. A lawyer by training, like much of that establishment he was educated at the elite École Nationale d’Adminstration before going into the French Treasury. Known for the long hours, by French standards, he puts in, Théodore was appointed chief executive and chairman of the managing board in 2000. His first priority was forging international alliances such as by taking over Liffe.

Marshall Carter is a former US Marine Corps officer who served in Vietnam. The chairman of the New York Stock Exchange since April last year, he earned his corporate stripes as chairman and chief executive of State Street Bank. Before that he spent 15 years with Chase Manhattan Bank. He has also lectured in leadership and management at MIT and Harvard. A graduate of the US Military Academy at West Point, he has a BSc in Civil Engineering and an MA in Science, Technology and Public Policy.

Jan-Michiel Hessels, the chairman of the Euronext supervisory board responsible for the company’s strategic direction rather than its day-to-day running, is a Dutch national. Euronext is quoted in Amsterdam, and even though the company is largely run from Paris, there is a political need to have such a high-profile position held by a non-Frenchman. He sits on the boards of several large Dutch companies including Philips, Heineken and the insurer Fortis.
His current term on the supervisory board expires in 2008.

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