London Stock Exchange confirms merger talks with Deutsche Boerse

If it is successful, the merger will create one of the world's largest exchanges for trading and risk managing derivatives.

Exchanges have benefitted from new bank rules (Getty)

The London Stock Exchange has confirmed it is in merger talks to create a "global markets infrastructure group" with German exchange Deutsche Boerse.

“The boards believe that the potential merger would represent a compelling opportunity for both companies to strengthen each other in an industry-defining combination, creating a leading European-based global markets infrastructure group,” the LSE said in a statement.

Deutsche Boerse was not immediately available for comment.

Shares in London stock exchange jumped more than 17 per cent following the news while shares in Deutsche Boerse were up more than 8 per cent.

The merger was first proposed in 2001 by Deutsche Borse. It was followed by a takeover big in 2004. Both deals were rejected by LSE.

If it is successful, the merger will draw the 15-year-old merger proposal to a close with the creation of one of the world's largest exchanges for trading and risk managing derivatives.

The combined company would rival CME Group and Intercontinental Exchange in the US and Hong Kong Exchanges and Clearing in Asia as the world's largest exchanges group.

Exchanges have benefitted from new bank rules seeking to enhance transparency by forcing trades, including derivatives trades, onto exchanges, rather than allowing them to occur in private, between banks.

"If the deal were to go ahead it would create a clear market leader for European and one of the largest exchanges in the world for trading and risk managing derivatives," David Cheetham, CFD and FX broker XTB.com, said.