The head of Europe's largest pension fund has called for any merged Euronext/New York Stock Exchange to be domiciled in Europe to overcome fears about over-regulation from the US.

Dutch shareholders in Euronext, led by Roderick Munsters, chief investment officer at ABP, have told the exchange it should transfer the base of the proposed €16bn ($21bn) merged company to Europe to assuage concerns over regulatory overspill from the US. The shareholders, estimated to hold about 4% of Euronext shares, said the proposed legal home for the holding company in Delaware could have negative effects on shareholder rights: "For example, under the new combination, shareholders are no longer entitled to call extraordinary meetings and directors will be elected by plurality voting," they said. The concerns indicate that the political battle over the merger is heating up ahead of Euronext's emergency meeting in Amsterdam on December 19. They are spelt out in a letter to Jean-François Théodore, chairman of Euronext's managing board and Jan-Michiel Hessels, chairman of its supervisory board. The letter, signed by Munsters and Rients Abma, director of Dutch corporate governance body Eumedion, which is leading the response of the country's shareholders to the merger, was copied to the Dutch Ministry of Finance. It said: "We believe the relevant European authorities should have the final say regarding the rules that apply in Europe." The shareholders are demanding a response from Euronext before the extraordinary meeting. The letter said they were not satisfied with the Dutch foundation structure proposed for the tie-up. Euronext has argued the foundation could be dissolved in the case of European regulatory contamination by US Sarbanes-Oxley rules. Separately, Proxinvest, a major advisor to French investors, has warned Euronext shareholders against the merger and urged them to block the deal when they vote next week. Pierre-Henry Leroy, the founder of the influential shareholder advisory group, told Le Tribune, the French newspaper, that French shareholders will have no say in key decisions by the merged group's management, citing Securities and Exchange Commission clauses that limit voting rights to 10%. Leroy said: "Shareholders will not be in a position to influence the management or governance of the company, nor present a new board member." He added: "The principle of responsibility requires that the board is accountable to the assembly of shareholders. This won't be the case in current conditions." Deutsche Börse, which one month ago abandoned its bid to buy Euronext, has confirmed it is holding talks with the Bulgarian Stock Exchange on Friday, but declined to say whether a merger is on the table. The Börse's November decision to pull out of the race for Euronext came just a week after similar talks with Milan's Borsa Italiana were called off and left the exchange looking increasingly isolated. Reto Francioni, the chief executive of the Börse, said at the time the exchange would focus on "organic growth and joint ventures in new markets such as Eastern Europe and Asia."