BERLIN - Deutsche Boerse said Wednesday that the European Commission has blocked the German stock exchange's planned merger with NYSE Euronext, a deal that would have created the world's largest stock exchange operator.

The European Union's executive body is prohibiting the merger because it found it to be inadmissible under competition law based on its assessment of the companies' position in the market to trade complex financial products known as derivatives, Deutsche Boerse AG said in a statement.

Chief executive Reto Francioni said that "prohibiting the planned merger prevents the creation of a European-based, globally competitive exchange group."

NYSE Euronext said in a separate statement that both companies are now "in discussions to terminate their merger agreement."

"While we are disappointed and strongly disagree with the EU decision, which is based on a fundamentally different understanding of the derivatives market, it is now time to move on," NYSE Euronext Chairman Jan-Michiel Hessels said.

The German exchange announced nearly a year ago that it was looking to buy NYSE Euronext for $10 billion. NYSE Euronext owns bourses in Paris, Lisbon, Brussels and Amsterdam, in addition to New York.

The Commission's decision was expected after the case team last month recommended the merger should be blocked, citing the combined exchange's dominance in the trading of key derivatives — complex financial products that allow investors to bet on developments in areas like interest rates or commodity prices.

The two companies argued that the vast majority of derivatives are traded directly between banks and other investors, rather than over exchanges and that the Commission should have taken that into account in its decision.