The stock exchange and Borsa Italiana have entered into an agreement which, if completed, would see the London Stock Exchange acquire its Italian counterpart for £1.1bn.
"This merger is the most important step yet for Borsa Italiana and the London Stock Exchange in realising their shared vision to be the world's capital market," the London Stock Exchange said.
The exchange said it expected to save £20m from the merger - split equally between IT and non-IT related savings - by 2010.
Tradelect, which went live last month, would also help the London Stock Exchange integrate additional capabilities which it will pick up through the Borsa takeover.
"Tradelect was designed so it could host trading in multiple asset classes such as derivatives bonds and futures, and not just cash equities," said a spokesman for the London Stock Exchange.
The Tradelect platform can be easily scaled to service other exchanges by adding servers, the exchange said. The platform is used on the Johannesburg Stock Exchange, following an agreement in 2001 by the London Stock Exchange and its South African equivalent to co-operate on technology and development.
Despite the agreement, the London Stock Exchange does not plan to sell the platform as a service to others. "Strategically, Tradelect is a source of competitive advantage and is not a trading system we will sell commercially," said a spokesman.
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