Nasdaq eyes London Stock Exchange

London's preferred option was a link-up with Frankfurt - but that has been blown out of the water

The world's biggest market for shares in technology companies, US-based Nasdaq, has said that it wants to form an alliance with the London Stock Exchange (LSE).

A spokesman for the Nasdaq market said there was "a logical potential partnership with the London Stock Exchange in that they have an established presence [in Europe] and contacts with key players".

The LSE has just survived a hostile take-over bid from the owners of the Stockholm stock exchange, OM Gruppen, while hostility among shareholders forced it to abandon plans to merge with its German rival, Deutsche Börse.

When London and Frankfurt discussed their plans to form the iX - international exchange - their declared intention was to expand the alliance to include the Nasdaq, but when the deal fell apart Nasdaq was left without a European partner.

Take-over target

Since then the London Stock Exchange's management has repeatedly insisted that it will now go it alone, but experts doubt whether this makes sense in the long-term.

Speculation was rife that the LSE might now become the target of a fresh take-over attempt by another rival, with the Nasdaq market often mentioned as one of the most likely contenders.

The Nasdaq spokesman did not discuss the details of how a link-up with the LSE might work, but said the US exchange would be speaking to other markets around the world as well.

But there are reports that Nasdaq officials have been in London for a couple of months now to explore the various options.

A limited alliance like a linking of trading systems would be one option, a full take-over of the LSE by the Nasdaq another one.

Global trading

Nasdaq's fiercest rival, the New York Stock Exchange, recently announced an alliances with Euronext - formed by the Paris, Amsterdam and Brussels stock exchanges - and other bourses around the world to create GEM, the Global Equity Market.

The aim of all those alliances, mergers and take-overs is the search for the holy grail of financial markets, 24 hour trading around the world in the most popular shares.