Sydney-based Macquarie, which has been considering a bid for the LSE since August, unveiled the bid late yesterday, a week before a 'put up or shut up' deadline set by The UK Takeover Panel. The bank has until 15 December to make a formal bid for the UK exchange or walk away.

Macquarie's 580 pence per share bid values the UK market operator at £1.5bn.

In a forthright statement, the LSE says it "rejects outright this derisory proposal which fundamentally undervalues the company and lacks any strategic or commercial credibility".

But the Australian bank argues that since it first confirmed its potential interest in LSE, constant speculation has continued to drive the LSE's share price "substantially above any level justified by the fundamental outlook for the LSE's business".

On Thursday LSE shares closed above Macquarie's offer at 612 pence. The stock has risen more than 70% since September last year on the back of growing speculation about the exchange's future.

The LSE rejected a £1.35bn - or 530 pence per share - bid from Deutsche Börse in December last year. The German exchange eventually withdrew its offer following a shareholder revolt which eventually led to its chief executive being ousted in May.

The LSE has also been in negotiations for almost a year with pan-European exchange Euronext, which has yet to declare the price it is willing to pay for the UK stock market operator.

Last month, following a seven month investigation into both takeover offers, Britain's Competition Commission (CC) gave the green light to both Deutsche Börse and Euronext to bid for the LSE on condition that they ensure the UK exchange's clearing provider remains independent.