The news of a possible acquisition of Turquoise trading system, which was established by nine leading European investment banks as an alternative to stock exchanges, comes as the LSE embarks on a to eliminate network messaging latency and overtake the speed of its dedicated e-trading rivals.

Last month, the LSE announced it for £18 million (US$28.8 million), replacing its Accenture built, Microsoft .Net-based TradElect platform. The new platform is understood to be based on Linux.

In a short statement to the financial markets today, the LSE announced it had "entered into exclusive discussions with Turquoise Trading Limited, which may lead to a transaction". An announcement is expected in the coming days. The LSE declined to comment further.

Ralph Silva, senior analyst at financial technology consultancy Tower Group, said the Turquoise technology was "easily a generation ahead of the LSE" and could be part of the attraction.

But he warned that Turquoise was a relatively new entrant to the market, and its technological capabilities "hadn't been proven" at the high trading volumes the LSE experiences.