NEW YORK (CNNMoney) -- NYSE Euronext (NYX, Fortune 500), the parent company of the New York Stock Exchange, and Germany's Deutsche Boerse agreed to merge in a $10 billion deal that will create the world's largest exchange for stocks and derivatives.
The deal, announced before the U.S. markets opened Tuesday, ends several days of negotiations between the two exchanges.
Under the terms of the deal, Deutsche Boerse will swap 0.47 of its shares for one share of NYSE Euronext. That will make the combined company 60% owned by Deutsche Boerse shareholders, with existing NYSE Euronext shareholders owning the remaining 40%.
The merged company will have combined revenue of $5.4 billion, according to a joint statement, making it the largest exchange by revenue.
"This transaction is a catalyst for the development of a global capital markets community, delivering the best, most transparent, and innovative services for clients and issuers, wherever they are," said NYSE Euronext CEO Duncan Niederauer in the statement.
The transaction will create a new Dutch holding company that will have headquarters in both New York and Frankfurt. The companies did not say what the new company would be named.
Niederauer will be CEO, while Deutsche Boerse CEO Reto Francioni will become chairman.
The merger is just part of what has been a wave of recent consolidation, as exchanges around the world look for ways to reduce transaction costs and increase exposure to the more lucrative derviatives, options and futures markets.
The deal is expected to face heavy scrutiny from both U.S. and European regulators as well as from politicial pundits, analysts said. Last week, former House Speaker Newt Gingrich said the possibility of the NYSE being majority owned by a foreign corporation was a "fundamental blow" to the United States. But other political figures, including New York City Mayor Michael Bloomberg and Democratic Senator Chuck Schumer, have been more upbeat.
"Politics is going to play significant role on whether this deal gets done," said Rafay Khalid, equity analyst for Standard & Poor's. "They want to approve this deal by the end of the year, but I think it's going to take a lot longer than that to work out concessions."
The transaction is expected to close at the end of 2011, pending shareholder and regulatory approval.
Shares of NYSE Euronext fell 2% to $38.68. 
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