NYSE Euronext chief executive Duncan Niederauer told the Financial Times there was only a "glimmer of hope" the deal would be approved by European competition authorities.
The newspaper's website quoted Niederauer as acknowledging he had "misjudged" the approach taken by European Union antitrust authorities to the deal.
With the EU authorities setting out conditions that executives negotiating a deal could not accept, a tie-up looked almost certain to fall apart. A decision by the EU's executive commission is due on February 1.
EU competition authorities opened a probe into the deal in August over concerns that the merged company would control 90 percent of the European derivatives market.
In November the companies proposed to separate some of their derivatives operations to allay EU concerns, but sources said the EU Commission was unsatisfied.
The proposed merger has also sparked controversy in the United States because it would hand over the New York Stock Exchange to foreign owners. A deal would see Deutsche Börse shareholders own 60 percent of the new combined, Netherlands-incorporated firm.