Analysis
By Declan Curry BBC Breakfast business presenter

It is seen as a marriage of desperation, but they could be the perfect partners.

Nasdaq is a street-smart, stock market upstart... the London Stock Exchange has spent years watching rivals nibble away at its business base

Nasdaq - the thirty year old market that calls itself "the stock-market for the next 100 years" - is reportedly back in talks to buy the London Stock Exchange, the biggest bourse in Europe and one of the oldest in the world.

Like true romance, some in the City say it is a case of opposites attracting.

Nasdaq is bold and brash.

The LSE is reserved - almost aloof.

Nasdaq screams its business from the corner of Times Square, with bright lights and video walls that stretch towards the sky.

The London Stock Exchange gives the impression it would rather keep itself to itself.

Nasdaq uses its media-savvy to whip up a circus for its clients, staging eye-catching events for companies with big news or shares to sell.

The LSE rarely speaks out, even when it is spoken to.

Opposite styles

But that is just style.

In substance - in their approach to business and in their backgrounds - the contrast is even greater.

Nasdaq is a street-smart, stock market upstart, going from zero to hero in just a quarter of a century.

It has spent its life taking business off - and eventually overtaking - its long-established Wall Street rival, the New York Stock Exchange.

The London Stock Exchange has spent years watching rivals nibble away at its business base.

It luxuriated in a cosy monopoly for the best part of two centuries, and was only forced into reform when the government threatened to use cartel-busting laws and big companies warned they might decamp to Wall Street.

Since the Big Bang in 1986, it has struggled to cope with America's red-toothed City invaders, and smaller, hungrier, European rivals.

Eye on expansion

But the two exchanges also have similarities.

For starters, both want to expand overseas.

In this marriage of convenience, the Nasdaq would be the one wearing the trousers

The Nasdaq's former leader - Frank Zarb - dreamt of creating a stock market that straddled the earth, with share trading around the clock.

He opened Nasdaq operations in Japan and in Europe - but they have not been as successful as he had hoped. In fact, some in the City regard Nasdaq Europe as almost irrelevant.

The one big strength of the London Stock Exchange is its portfolio of British-based, internationally-operating businesses. It makes its money trading the shares of world beaters like BP, HSBC, GlaxoSmithKline and Vodafone.

It knows there is a huge demand from abroad for these stocks - and it wants as many global share traders as possible to put their business through its books.

Linking up with the Nasdaq would give it greater access to America's two big pools of investment money - the Wall Street titans, and the vast army of private investors.

And if it could use that foreign footing to tempt big companies from the US, Japan or Germany onto its share lists as well, then that's all to the good.

That is why the two would make a very snug fit.

As one analyst put it (in rather cruel terms) - the LSE has product, but no strategy; Nasdaq has strategy, but no product.

London has the valuable companies, but is seen as a bit deficient in the management and vision stakes. Nasdaq has energy, vision and oomph to burst, but doesn't have the big-buck companies.

'Stench of failure'

And both exchanges also have a bit of shame they want to erase.

The London Stock Exchange has been accused of being arrogant

London needs desperately to dispel the stench of failure. Its plans to merge with the market in Frankfurt were torpedoed by the Stock Exchange's own trading firms - they thought the management on Threadneedle Street had come home with a great deal - but for the Germans, not London.

Then it faced the utter indignity of fighting off a takeover bid from the Scandinavian OM Group - a bid battle that had the air of a brash new corner shop trying to buy Marks and Spencer.

And it topped off the catalogue of misery by failing to buy the London future exchange LIFFE - even though LIFFE effectively handed itself over - bound and gagged - on a silver platter.

Nasdaq has an even more difficult bit of cleansing to do.

It has to stop people thinking about Tech Wreck. Nasdaq is where millions of Americans lost their shirts, their pants, and their socks and shoes when the technology boom collapsed. It was the lodging house for million-dollar boasters cut down to red-cent minnows.

London's worries

But in this marriage of convenience, the Nasdaq would be the one wearing the trousers.

Despite the tech collapse, Nasdaq still sees itself as the next best thing in share dealing. The LSE's shareholders fret about their future role, and panic about being eclipsed by Euronext, the grouping of second-tier European markets that eventually bought LIFFE.

London is almost terrified of its own shadow.

But even though it's scared, and has been flinging itself at other partners, the LSE still has the capacity to wreck this dream wedding.

The secret weapon is arrogance.

This was one of the reasons insiders at LIFFE gave for its decision to break off its merger talks with the LSE. LIFFE's executives couldn't stand what they described as the arrogance and conceit of the Stock Exchange's top players.

And we all know the deals that have been broken by the clash of big egos.

Glaxo made several attempts to merge with SmithKline Beecham, but they all foundered as Glaxo's former chief executive Sir Richard Sykes continued to clashed with his opposite number. The deal only went through when both men decided to stand down.

And even then, the whisper was that they were "persuaded" to go. It's very rare indeed for a senior executive to put their ego to one side and voluntarily stand down to help a merger sail through for the good of shareholders.

The last example was Peter Burt, who vacated the top job at the Bank of Scotland to ease its merger with the Halifax. That was seen widely as a noble - and rather novel - decision.

There are many rocks that could scupper any London-Nasdaq deal. There's their difference in style. Their different approach to business. Their trading systems. Logistics. Money.

But the biggest of the lot is ego. If this deal is to go through, will the senior people who got LIFFE's back up have to step aside this time?