Talks between Deutsche Boerse and the London Stock Exchange on a possible link-up have intensified recently, but a deal did not appear imminent, a source familiar with the situation said on Friday.
The two exchanges were poised to merge in 2000 but the deal foundered amid opposition from UK brokers and a hostile bid for the LSE from Stockholm Stock Exchange operator OM Group.
Since then, both Deutsche Boerse and the LSE have become public companies, giving them more leeway to pursue transactions.
"There are strong indications that serious talks are taking place," one source familiar with the two parties said.
"They have been talking for some time, but at this stage there is more talking than there was. DB is the natural ally because they can bring expansion from the trading perspective and they also bring the clearing and settlement that they will be able to leverage," the source added.
The LSE said it did not comment on speculation, and Deutsche Boerse had no comment regarding the issue of any possible talks.
The proposed iX deal between LSE and Deutsche Boerse that foundered nearly four years ago was a "merger of equals", but this time round any deal would be a take-over by Deutsche Boerse of its smaller rival, the source said.
The LSE has a market capitalisation of 1.125 billion pounds ($2.02 billion) while Deutsche Boerse is valued at 4.788 billion euros ($5.77 billion).
The London exchange remains Europe's top equity market, however, its listings totalling two trillion euros in market capitalisation at the end of April.
This is far ahead of Deutsche Boerse's 857 billion euros, though the Frankfurt exchange owns half of Eurex, the world's top derivatives exchange, and also owns its own clearing and settlement houses.
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