* Questions over any job cuts unresolved -source
* Three previous merger deals failed on disagreements
* State of Hessen retains veto
By Edward Taylor and Arno Schuetze
FRANKFURT, Feb 10 (Reuters) - Deutsche Boerse's planned merger with NYSE Euronext is far from being in the bag. It will face intense scrutiny from German regulators, European anti-trust authorities and sceptical politicians.
While executives from Frankfurt and New York have hatched an outline accord -- known as "Project Gamma" -- obstacles that scuppered previous attempts to combine Deutsche Boerse with Euronext have still to be overcome.
"These key questions are not yet resolved," a senior German financial source told Reuters on Thursday.
From the share exchange ratio, where to base the headquarters, the location of information technology (IT) and where to put derivatives and shares trading to the issue of where to make job cuts, the stumbling blocks haven't changed.
IT, where many of Deutsche Boerse's 3,000 employees work, could prove a particularly tough negotiation for the parties, with German fears it could end up conceding too much.
One source close to the deal said IT could be located in Paris, while another said this was still under discussion.
Bankers working on the deal say such concerns have been put to rest with a proposal that will avoid the combined exchange having a group headquarters and instead divide key functions for a new company between New York, Frankfurt and Paris.
"The question of headquarters is an emotional one, but it has been of minor importance in this deal," a banker close to the deal said.
Other plans include locating the headquarters of the derivatives unit of Deutsche Boerse-NYSE Euronext in Frankfurt, while New York will get stock trading, two sources close to the deal said.
WIESBADEN VETO
And then there's the city of Wiesbaden, where Deutsche Boerse's regulator, is based. It can veto any merger by refusing to award an operating licence to the combined group. The Economics Ministry in the state of Hessen said on Thursday it would "seek to preserve the interests of Frankfurt as a financial centre" when it reviews the merger plans, adding it had not yet received formal notification of any deal.
Wiesbaden's worries over job losses will only be further fuelled by the fact that Deutsche Boerse appeared not to have consulted its own labour representatives.
"It cannot be that plans over who should be Chief Executive and Chairman have already been made without speaking to the supervisory board," labour representative Johannes Witt told Reuters.
Deutsche Boerse's three failed transformational deals with Euronext give some clues about the hurdles for the current combination, which uses a similar structure to previous attempts.
The last attempt, made in 2006, failed because Deutsche Boerse said it was "necessary to focus the central functions of the group in one location", despite agreeing to divide up certain functions between Paris, Brussels and Amsterdam.
In 2003, when Euronext Chief Executive (CEO) Jean-Francois Theodore and Deutsche Boerse CEO Werner Seifert first sat down to discuss what was referred to as "project Antibes", the deal failed because the French insisted on parity, even though Deutsche Boerse was worth twice as much as Euronext.
A dual leadership model was also discussed, but the Deutsche Boerse executive board eventually came out against the idea.
Another attempt was made in the autumn of 2004, known as "project Edelstein" in a deal negotiated in a hotel in Burgundy.
That time Euronext agreed to a deal that respected Boerse's larger market capitalisation, but insisted on equal representation of Euronext and Deutsche Boerse managers, a format which it has now adopted for the deal with NYSE Euronext. (Additional reporting by Ludwig Burger, Harro ten Wolde, Anika Ross and Philipp Halstrick; Editing by Alexander Smith)