Nordic and Baltic market operator OMX is in advanced discussions to become the sole technology provider for Project Turquoise, the bank-backed equities trading platform that will compete head-to-head with domestic stock exchanges in Europe.
According to a report by UK broadsheet The Daily Telegraph OMX is the preferred technology vendor of the investment banks behind Project Turquoise, which is being set up in response to the introduction of the EU's Markets in Financial Instruments Directive (MiFID).
Final negotiations should lead to a contract being signed shortly, says the report.
The deal, which is expected be announced next month, could put US exchange operator Nasdaq - which is in the midst of taking over OMX - in direct competition with the London Stock Exchange (LSE) and other exchanges in the region.
With its 30% stake Nasdaq is the largest shareholder in the LSE, although this will be diluted following the proposed merger of the UK market operator with Borsa Italiana. Nasdaq built up its stakeholding in the LSE during its failed attempt to acquire the London exchange last year, causing many in the market to expect the US exchange to return with a new bid for the LSE in February 2008.
However the Daily Telegraph report says that the OMX deal could give Nasdaq a "significant foothold" in Europe without having to buy the LSE.
Earlier this year the seven investment banks behind Project Turquoise - Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS - selected DTCC subsidiary EuroCCP to provide clearing and settlement services for the new venture.
EuroCCP will provide all clearing, settlement and risk management services to Turquoise, while Citi's global transaction services business will serve as settlement agent.