Shares in the London Stock Exchange (LSE) have jumped by 30% on Monday following speculation of a bid war.
NYSE could become the fourth major exchange to target the LSE
On Friday the LSE rejected a £2.43bn ($4.2bn) bid from the New York-based exchange Nasdaq.
This sparked speculation that the New York Stock Exchange (NYSE) and Euronext would table counter-bids.
NYSE chief John Thain is reportedly consulting advisers about making a bid, while Euronext is expected to make a statement on Tuesday.
Some investors have welcomed the latest developments.
"It is clear that this franchise has huge attractions to a number of potential suitors... [and] the market's valuation is beginning to reflect current realities," said Michael Taylor, head of equities at Threadneedle Investments.
"As the LSE's largest shareholder, we have consistently encouraged the board of the LSE to take a bold and steadfast view of its future and, should independence no longer be tenable, to maximise the value of its unique franchise."
Nasdaq has said that although it would prefer to reach an agreed deal, it has not ruled out raising its offer or going hostile.
The LSE turned down the all-cash offer of 950 pence per share on Friday saying it "substantially" undervalued the firm.
Reports have now suggested that the Nasdaq could raise its bid to £10 per share.
Such bid speculation has attracted fresh investor interest. Shares in the London Stock Exchange closed 269p, or 30.57%, higher at 1149p.
Nasdaq could face an uphill struggle should the NYSE decide to throw its hat into the ring.
Experts suggest the NYSE - the world's biggest stock exchange - would not like to miss the opportunity to buy the LSE - nor would it like to see its smaller rival Nasdaq steal that chance away.
However, any offer from the NYSE is likely to take at least six weeks to materialise.
The New York exchange has just made its debut on the stock market, while its merger with electronic trading network Archipelago was completed only four days ago.
"NYSE is looking for acquisitions," said David Buik at spread-betters Cantor Index.
"London seems totally obvious, totally sensible and I expect them to come galloping over the hill to conclude something at around the 950p to £10 level in the months to come."
String of suitors
But if the NYSE does decide to make an approach it will become the fourth major world exchange to show an interest in the London exchange.
Germany's Deutsche Boerse kicked off the takeover race for the exchange with a £1.25bn approach in 2004. It later walked away in the face of shareholder protests.
Since then, Paris-based Euronext has expressed and interest while Australia's Macquarie Bank recently dropped its £2.6bn offer.
An acquisition by a US group could lead to considerable cost savings and synergies.
It would also be free of the hurdles Euronext and Deutsche Boerse faced, though it would also introduce fresh difficulties for the London exchange.
Last year, UK regulators said they would back a takeover by either Euronext or Deutsche Boerse on condition that each company ensured the independence of the London exchange's clearing provider, Clearnet.