BRUSSELS/LONDON (Reuters) – NYSE Euronext and Deutsche Boerse could try to put the disappointment of their failed $7.4 billion merger deal behind them by turning their attention to European exchange and clearing assets and a less ambitious growth path.

Deutshe Boerse and NYSE's proposal to create the world's largest exchange operator was rejected by European anti-trust authorities on Wednesday, making it the fourth to be blocked among a series of large exchanges deals struck in a frenzy of activity over the last year.

Now, the exchange operators need another way of facing the imperatives that led them to seek mergers in the first place: the need for scale and cost savings amid global competition.

NYSE Chief Executive Duncan Niederauer, in an interview last week in Davos, said the company had another strategy it had been pursuing even as it tried to close on the Deutsche Boerse deal.

"We have a standalone strategy that was our strategy before we engaged in this. We carried out a lot of elements of that in 2011," Niederauer told Reuters on Friday. "We will continue to be primarily focused on the derivatives and technologies businesses."

On Wednesday, NYSE said it plans to return $550 million to shareholders through a share repurchase program and to seek to grow its derivatives business.

NYSE and Deutsche Boerse have also been linked in media reports with the London Metal Exchange (LME), the metals market that has been put up for sale by shareholders.

A move on the LME would pitch them into a wide field thought to include the IntercontinentalExchange and CME Group from the United States, and the LSE and British broker

ICAP.

NYSE Euronext is also seen by analysts as an obvious rival bidder for European clearing house LCH.Clearnet, which has been in exclusive sales talks with the London Stock Exchange since September.

NYSE was in talks about a possible joint bid for LCH with data vendor Markit but the plan was scrapped in the middle part of last year.

"NYSE Euronext couldn't have been 100 percent focused on LCH with the Deutsche Boerse talks going on at the same time. In retrospect, it looks like they may have missed out on LCH," said Simmy Grewal, senior analyst at Aite Group.

But Richard Perrott, an analyst at Berenberg Bank, believes NYSE could look to rekindle that deal. He said: "Both exchanges will likely look at the LME and I suspect NYSE will see if they can resurrect their earlier talks with LCH Clearnet."

Steve Grob, head of Group strategy at trading system vendor Fidessa, said: "The rejection by the EC was not a surprise so they will have thought about their Plans B and C."

Deutsche Boerse and NYSE Euronext declined to comment on the possibility of bids for other assets.

END OF MEGA-DEALS?

Analysts said the regulatory veto on Wednesday might put a temporary brake on mergers.

"The motivation to do deals is as relevant as ever, with exchanges needing to scale up and seek cost synergies, but the failed deals over the past year will make investors and companies more cautious," said Perrott.

"But Deutsche Boerse/NYSE Euronext was an unusual deal in that there were obvious competition concerns that wouldn't exist with most other exchange combinations."

Nasdaq OMX Chief Executive Bob Greifeld said large deals are still feasible, but companies would need to take into account the regulator's analysis of the market.

"Now, when you look at this, any time you are trying to complete a merger where the number of competitors is low or the market share is high, your success will hinge on whether you can broaden the definition of the market," he told a conference call after Nasdaq posted better-than-expected quarterly earnings.

Among other failed deals were Nasdaq and IntercontinentalExchange's bid for NYSE Euronext which was rejected by the U.S. Department of Justice, London Stock Exchange's takeover of TMX Group was halted by shareholders of the Toronto Stock Exchange operator, and Singapore Exchange Ltd's bid for Australia's ASX Ltd was blocked by the Australian government.

EU regulators blocked the tie-up of Deutsche Boerse and NYSE Euronext to stop them taking a stranglehold on the European futures market.

The European Commission consulted more than 700 market participants and stakeholders during its assessment and said in a 459-page document on Wednesday that the combined entity would make it hard for new players to compete.

"The merger between Deutsche Boerse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide," EU Competition Commissioner Joaquin Almunia said in a statement.

"These markets are at the heart of the financial system, and it is crucial for the whole European economy that they remain competitive. We tried to find a solution, but the remedies offered fell far short of resolving the concerns."

Deutsche Boerse and NYSE Euronext had refused to sell either the German operator's Eurex derivatives market operator or the U.S. company's London-based futures exchange Liffe to address such concerns.

The failure will also cost the banks advising on the deal.

NYSE's bankers, which included Perella Weinberg Partners and BNP Paribas, stood to earn about $51 million in fees if the deal had closed, according to Freeman & Co estimates. Now they will likely make about 10 percent of that amount.

For Deutsche Boerse, bankers included Deutsche Bank and JPMorgan Chase, which will now likely earn 10 percent of the $48 million they stood to make if the deal had closed, Freeman said.

Deutsche Boerse shares closed up 3.4 percent, while NYSE Euronext shares closed down 0.5 percent.

(Additional reporting by Edward Taylor and Christoph Steitz in Frankfurt, John McCrank in New York, editing by Sebastian Moffett and Elaine Hardcastle)

HONG KONG (Reuters) – China pushed for greater international use of the yuan on Wednesday by promising to let foreign investors buy mainland shares and bonds, pushing up shares of brokerage stocks listed in Hong Kong.

The plans, among a string of others unveiled by China Vice Premier Li Keqiang, underscored Beijing’s intent to propel explosive growth in the Hong Kong offshore yuan market and turn the yuan, or renminbi, into a widely-traded currency one day.

In a sign of Beijing’s patent currency ambitions, it also concluded the biggest-ever offshore yuan bond deal on Wednesday in Hong Kong, which Li made clear would remain the paramount center for cultivating a yuan market outside China.

“Hong Kong can make good use of the opportunities in the yuan’s growing importance…to further enhance its status as an international financial center,” Li said at a launch of the record-sized yuan bond that was attended by other Chinese officials including Central Bank Governor Zhou Xiaochuan.

Li’s speech, with its specific policy announcements, along with other recent substantive speeches from him appeared to signal that China’s top leaders are preparing him for a larger role ahead of his widely expected promotion to premier in 2013.

Li said foreign owners of yuan can soon buy up to 20 billion yuan ($3.1 billion) worth of yuan-denominated stocks and bonds on the mainland with the renminbi. He did not give an exact launch date for the scheme.

The news sparked a rally in Hong Kong-listed shares of brokerage stocks. First Shanghai (0227.HK) soared 22 percent and Shenyin Wanguo (0218.HK) surged 21 percent.

By letting more yuan flow between China and Hong Kong, analysts said China gets room to experiment with a gradual easing in capital controls that may be shaken off in a big way overtime if Beijing chooses to free the yuan.

For investors in the Hong Kong offshore yuan market who can only funnel their yuan into yuan deposits or yuan-denominated bonds for vapid returns of between 0.4-3 percent, analysts say the scheme, also known as “R QFII,” gives respite.

“With more investment options available, firms and depositors in Hong Kong will use and hold yuan more willingly in the future, which is a positive move,” said Chen Yong, an analyst at Huatai United Securities in Shanghai.

While many foreign investors hold the yuan on the assumption it is set to rise, slim returns are a sore point nonetheless, especially since similar yuan investment on mainland China can earn up to 3 percentage points more.

PROMOTING YUAN

At the heart of Beijing’s push to raise the yuan’s international profile is a desire to have a currency that matches its growing clout, and the hope of cutting China’s reliance on the dollar.

To that end, China wants firms to not just rely on the U.S. currency when settling trade.

China’s experiment with using Hong Kong as a place outside the mainland where the yuan can trade, and as a test bed where capital controls can be gradually eased, has met with great success.

Yuan deposits in Hong Kong have surged over seven times to more than half a trillion yuan in less than two years, making it more pressing for banks — and Beijing — to give foreign owners of the yuan more attractive investment options.

“Not only is Beijing still comfortable with the rapid pace of offshore yuan market development, it is taking the yuan internationalization process to the next stage,” HSBC said.

“By opening up a significant channel for yuan inflows back to onshore asset markets, (it is) closing the circle for the global circulation of China’s currency,” the bank said.

Indeed, Li made clear that China is ready to provide Hong Kong with more investment avenues for its yuan deposits.

He said mainland companies are now allowed to sell bonds in the territory, a shift from before when only financial companies could issue bonds in Hong Kong.

To anchor the yuan bond market, Li said Beijing is committed to selling Treasury bonds in Hong Kong.

“Issuing renminbi treasury bonds in Hong Kong will be a long term institutional arrangement of the central government,” Li said.

“We will gradually increase the size of insurance and work for the development and improvement of the renminbi bond market in Hong Kong,” he said.

Li’s remarks came as China sold 20 billion yuan ($3.1 billion) of bonds in its biggest-ever issue, adding depth to a fast-growing market.

“It’s all very positive,” Bonn Liu, a partner-in-charge at KPMG China Capital Markets, said of Li’s announcements. “It’s a step out for the yuan.”

Below is a list of plans outlined by Li:

– China to launch RMB QFII which would allow foreign investors to invest in mainland securities with initial quota size of 20 billion yuan

– China to promote Hong Kong as offshore yuan trading center

– China to further open up services sector to Hong Kong

– China to expand yuan trade settlement scheme nationwide

– China to allow Hong Kong firms to directly invest in mainland China using the yuan

– China to expand Treasury bond sales in Hong Kong

– China to launch in ETF linked to Hong Kong stocks in mainland China

– China to let Hong Kong insurers set up branches in mainland China, take stakes in mainland insurance firms

– China to study possibility of letting Hong Kong participate in China’s existing free trade agreements

– China’s flagship West-East gas pipeline to start supplying gas to Hong Kong in 2012

($1 = 6.383 Chinese Yuan)

(Additional reporting by Saikat Chatterjee; Donny Kwok and Alison Leung; Writing by Koh Gui Qing; Editing by Chris Lewis and Ken Wills)

CHICAGO (Reuters) – NYSE Euronext and Germany’s Deutsche Boerse AG will become the market leader of the ultra-competitive U.S. options trading industry once their merger is complete, data from clearinghouse OCC showed on Monday.

Last month NYSE and Deutsche Boerse shareholders approved the transatlantic merger, which will bring together not only Europe’s two biggest derivatives exchanges but also three mid-ranking U.S. options marketplaces.

The exchanges — Deutsche Boerse’s International Securities Exchange and NYSE’s Amex and NYSE Arca venues — together handled 40.3 percent of all U.S. stock- and stock-index options trades last month, according to figures on the OCC website.

Bragging rights for the No. 1 spot have in recent months gone to either CBOE Holdings Inc, which owns the oldest U.S. options exchange, or Nasdaq OMX Group, which operates two venues, PHLX and NOM.

CBOE, which also owns the electronic C2 market, handled 26.2 percent of all options contracts traded in July; Nasdaq handled 25.9 percent.

Traders say they expect NYSE and Deutsche Boerse to lose some of their collective volume once they complete the merger, as market participants spread their business among competitors.

But the large lead the three exchanges have over their nearest rivals suggests they will keep their collective top spot for some time to come, analysts have said.

The merger still needs the approval of regulators, which in Europe may require a review lasting through the end of the year.

Deutsche Boerse is buying NYSE Euronext for about $9 billion.

(Reporting by Ann Saphir; Editing by Lisa Von Ahn)