Nasdaq and Borse Dubai have drawn up plans to entice the London Stock Exchange into a pan-continental alliance that could challenge a recent merger between France's Euronext and the New York Stock Exchange.
The plan would involve creating a new company in which London would have the dominantposition, but would link trading platforms in the Gulf states, Sweden and the US.
The project has been hatched by Dubai and Nasdaq, which joined forces last week in a bid to seize control of Stockholm-based OMX.
That deal was accompanied by a flurry of activity that also saw Dubai and the Qatar Investment Authority emerge with just under 50 per cent of the LSE, which is headed by Clara Furse. Qatar, too, bought a 10 per cent holding in OMX.
A City of London source said: "Dubai acquired a slug of shares in the LSE from Nasdaq for less than Qatar [was offering]. That means Nasdaq and Dubai have wider objectives - both are known to want a closer relationship with London."
Analysts say London could still face a hostile bid from Nasdaq/Dubai in February when the American exchange can bid again under Takeover Panel rules.
