NY exchange in strategic talks, LSE said involved

LONDON/NEW YORK, Apr 16 (Reuters) The New York Stock Exchange said it was in talks regarding a strategic transaction, and a source familiar with the situation said on Saturday that the London Stock Exchange is one of the parties to the discussions.

The source, who spoke on condition of anonymity, declined to give further information and the two exchanges would not comment on whether they were in talks.

Consolidation speculation has surrounded the exchanges sector as they explore ways to link up to try and boost volumes and cut costs.

Exchanges have also followed a trend of abandoning member-ownership structures to go public.

The NYSE, the world's largest stock exchange, said in a filing on Friday: ''... we routinely engage in discussions with industry participants regarding potential strategic transactions. We are currently engaged in discussions with certain participants, although no definitive terms have been discussed or agreements reached.'' It said it intended to ''continue to engage in strategic discussions'' and ''respond to potential opportunities quickly and decisively.'' That came just days after rival Nasdaq Stock Market Inc.

snapped up a stake in the London exchange (LSE) after its offer of .2 billion takeover was rebuffed.

Nasdaq has refused to say whether it will acquire more shares in the LSE, but analysts believe the move gives it a head start if it decides to acquire the exchange and an advantage in blocking a rival bidder.

But other bidders could still move in and some analysts have speculated that the NYSE, which recently gained currency to make acquisitions through becoming a public company, could move to bid for the LSE.

''Nasdaq resurrected itself with this ownership stake, but it doesn't lock in any guarantee about acquiring the LSE,'' said analyst Richard Repetto at Sandler O'Neill.

In its filing, the NYSE said: ''The market for acquisition targets and strategic alliances is highly competitive, particularly in light of increasing consolidation in the securities industry, which may adversely affect our ability to find acquisition targets or strategic partners.'' The comments were in a filing posted on Friday to the SEC's Web site (www.sec.gov) about its planned secondary share offer.

As well as speculation surrounding the LSE, some analysts have said the Big Board might target either Amsterdam-based Euronext or Frankfurt's Deutsche Boerse AG , the two other big European markets.

The 300-year-old LSE, which has been wooed by suitors as varied as Australia's Macquarie Bank Ltd. and Deutsche Boerse, said this week it was considering talks on tie-ups with other exchanges but could thrive on its own.

Euronext and Deutsche Boerse are also in exploratory merger talks and some analysts suggest the hunted LSE may soon turn hunter in pursuit of its own acquisition.

Shares of the NYSE have rallied 17 percent since it became a public company a month ago, and closed on Thursday at .08.

Nasdaq shares, which have risen 20 percent this year, closed at .24. Shares of the LSE, which have nearly doubled this year.

closed at 1,232.5 pence on Thursday. Stock markets in New York and London were closed on Friday.

REUTERS PV GC1726