The European Commission, the EU's executive body, said it was ruling against the merger because the combined exchange would have controlled more than 90 percent of the trading in European derivatives - complex but highly profitable financial products that allow investors to bet on changes in interest rates or the price of oil. It said that the combined company's dominance of that market would have made it almost impossible for competitors to offer rival trading systems. The Commission's decision deals a blow to Deutsche Boerse AG and NYSE Euronext, which hoped combining their businesses would have allowed them to compete better with other large exchanges in the U.S. and Asia. But it also underlines the profound transformation their businesses - and financial markets as a whole - have undergone over the past decade. Today, the value of outstanding derivatives contracts has surpassed by many times the value of traditional financial products like stocks and bonds. Deutsche Boerse and NYSE Euronext both managed to build highly profitable businesses out of this trend and today own Europe's biggest derivatives exchanges. A push from regulators across the globe to push more derivative trades onto exchanges to make the market more transparent has opened even bigger opportunities for established players. To make the merger acceptable, the Commission wanted the companies to sell either Deutsche Boerse's Eurex or NYSE Euronext's Liffe - something they refused. "This is a black day for Europe and its global competitiveness on financial markets," Deutsche Boerse Chief Executive Reto Francioni said in a news conference in Frankfurt, Germany. Francioni added that the decision will prevent the creation of a "globally competitive" European exchange group that would have helped strengthen the Commission's push for transparent and stable financial markets. NYSE said in a statement that the two companies are now discussing terminating the merger agreement. The Commission's decision did not come as a surprise as last month a competition case team recommended the merger should be blocked, based on the combined company's dominance in the trading of some of the most popular and liquid European derivatives. But the two exchanges argued that the vast majority of derivatives are traded directly between banks and other investors, or over-the-counter (OTC), rather than on exchanges, providing healthy competition in the overall market. They also pointed to Chicago-based CME Group, which has a similar dominance over trading in key American derivatives. But Almunia argued that neither the over-the-counter derivatives market nor CME Group could have been true competitors to a company owning both Eurex and Liffe. He said derivatives based on U.S. indexes or interest rates traded on the CME were useless for investors trying to hedge against changes in their European equivalents. Over-the-counter trades, he argued, were riskier than exchange-based trades, eliminating then as an alternative to many companies. Deutsche Boerse announced nearly a year ago that it was looking to buy NYSE Euronext for $10 billion. Juergen Baetz in Berlin and David McHugh in Fankfurt, Germany, contributed to this story.