Euronext appears to have lost out on buying the LSE

The bourse would rival the London Stock Exchange (LSE), NYSE chief executive John Thain told the Financial Times.

The move would be made if the merged firm did not manage to attract enough international listings, the paper said.

The NYSE had ambitions to buy the LSE, but now rival US exchange the Nasdaq looks favourite to tie up a deal.

Mr Thain told the FT that buying the LSE would be one option, but that another would be "to set up our own exchange in London".

Appeal

The NYSE has had difficulties attracting foreign firms to list in the US because of regulations introduced in the aftermath of the Enron scandal.

A merged exchange has more appeal as traders, investors and issuers are all keen to reduce transaction costs - especially in clearing and settlement.

Euronext announced last month it had agreed to be bought by the NYSE in a deal that would create the first transatlantic stock market worth $20bn (�11bn).

Euronext had been considering a possible takeover of the LSE but dropped out of the race when Nasdaq, which has built up a 25% stake in the London exchange, moved in.

Stock exchanges globally are looking to merge as competition for business increases, fuelled by a shift into electronic trading.