The Kuwait Stock Exchange is in advanced talks with three market operators - Deutsche Börse, Nyse Euronext and Nasdaq OMX - about the provision of an electronic trading platform, according to a Reuters report.
Citing sources familiar with the situation, the Reuters reports says the Kuwaiti bourse is hoping to complete on a deal by the autumn.
The move follows a commissioned review of the exchange's performance by US consultancy McKinsey & Co earlier this year, which called for an overhaul of trading and administration systems.
Reuters says talks with Deutsche Börse have gone well, paving the way for Kuwaiti IT staff to visit Germany next week to investigate compatibility.
With Kuwait keen to follow the lead of other Middle East countries and reduce its economic dependence on oil, the state owned exchange could look to sell a stake to a Western operator in the longer term, says Reuters.
Last month Nyse Euronext acquired a 25% stake in Qatar's Doha Securities Market (DSM) for $250 million under a deal that includes the development and management of a new cash and derivatives exchange.
The Dubai International Financial Exchange (DIFX) also has a Western investor, with Nasdaq OMX holding a 33% stake in the bourse. The transatlantic exchange is also supplying a new platform that DIFX will use for all trading, including equity derivatives which it plans to list for the first time later this year.