The London Stock Exchange (LSE) and European bourse Euronext have been in secret talks to merge, according to a report in the Observer.
The London Stock Exchange is keeping its options open
Discussions have been underway between Morgan Stanley, Euronext's financial advisor, and Merrill Lynch on behalf of the LSE, said the newspaper.
It is thought the plan could be presented at Euronext's annual general meeting on 23 May.
An LSE spokesman declined to comment on the speculation on Monday.
A merger between the two companies would create a new exchange worth about £6bn ($10bn).
Talks between the LSE and Euronext are said to have increased in recent weeks following the LSE's rejection of a £2.4bn bid by New York exchange Nasdaq.
Shares in the LSE rose in March by 30% following speculation of a bid war.
Euronext, which is present in Paris, Brussels, Lisbon and Amsterdam, is simultaneously considering an alternative deal with German rival Deutsche Boerse.
The pan-European exchange is also in talks with at least one US company said The Business, thought to be the Chicago Mercantile Exchange.
Last week Jean-Francois Theodore, Euronext's chief executive, said interested parties should submit proposals before 23 May.