Chief executive of the LSE Group, Xavier Rolet, has been holding talks in recent weeks with his counterpart in Asia, Magnus Bocker, about the potential benefits of merger, according to .

Last year LSE failed to secure a tie-up with Toronto's stock exchange, TMX, after a consortium of Canadian banks and pension funds received political backing.

Reports suggest that because Singapore has larger market capitalisation - £4.4 billion against LSE's £2.8 billion - it is likely that the Asian exchange will take over its London rival.

However, even if the deal got support from the groups' shareholders, it would still be subject to regulatory approval from the European Union (EU) and Singapore authorities.

If the deal were to go through, the LSE/Singapore tie-up would be the third largest exchange group in the world, in terms trade volumes, behind NYSE Euronext and Nasdaq OMX.