The New York Stock Exchange and Germany's largest stock exchange agreed Tuesday morning to merge operations.

The boards of NYSE Euronext and Deutsche Boerse both voted Tuesday morning on the deal, which was leaked to the public last week.

Shareholders in the German company are set to hold a 60% stake in the merged firm, while NYSE Euronext shareholders will have a 40% stake. The new company will be incorporated in the Netherlands and have joint headquarters in Frankfurt and New York.

Though each company built its reputation as an exchange for stock trading, a majority of the revenues at the new company will come from other aspects of their operations.

"The combined group will earn approximately 37% of total revenues in derivatives trading & clearing, 29% in cash listings, trading & clearing, 20% in settlement & custody, and 14% in market data, index & technology services," the firms said in a statement.

The deal still has to be approved by shareholders and regulators, who may balk at the large market share controlled by the new company. The firms said that together they will be the largest exchange group in the world.

Duncan Niederauer, the CEO of NYSE Euronext, is set to be the CEO of the new company, while the Deutsche Boerse's CEO, Reto Francioni, will take the role of chairman.

"The increasing globalization and interconnectedness of capital markets, and the rapidly growing presence of alternative trading venues that operate with less transparency and far fewer regulatory requirements, will position the new company as a true global player well placed to drive the long-term strength and competitiveness of transparent and regulated markets," Niederauer said.

NYSE Euronext shares were down $1.27, or 3.2%, to $38.18 after surging 17% last week.

The companies didn't say what the merged entity would be called. Sen. Charles E. Schumer (D-NY) has insisted that "New York" should come first in the new name.

-- Nathaniel Popper in New York

Photo: The Deutsche Boerse in Frankfurt, Germany, in June 2007. Credit: Martin Oeser /AFP/Getty Images