Deutsche Boerse and the London Stock Exchange are taking a fresh run at a merger that would create a large European exchange operator potentially capable of facing down strong competition from the United States and Asia.
The LSE said in a statement it was holding detailed discussions on an all-share merger under a new holding company that would give Deutsche Boerse shareholders a 54.4 per cent stake and LSE shareholders 45.6 per cent.
The talks, using code names Delta for Deutsche Boerse and Luna for the LSE, are at an early stage, a person familiar with the matter told Reuters earlier.
Shares in both exchange operators jumped on the news, with LSE shares up 18.7 per cent and Deutsche Boerse up 8.3 per cent by 1406 GMT.
Deutsche Boerse, which had worked on a joint venture called iX with the LSE in 2000 before making a full-blown but failed attempt to take over its British counterpart in late 2004, was not immediately available for comment.
Deutsche Boerse Chief Executive Carsten Kengeter, on taking the German exchange operator's helm in June, said he had an "open mind" on both bolt-on and large acquisitions as part of his strategy to boost growth and revenue.
He has since spent around $US1.5 billion ($A2.07 billion) buying out equity index joint ventures from Switzerland's Six Group and taking over foreign exchange trading platform 360T.
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