ONE of the biggest shareholders in the New York Stock Exchange is to propose a strategic link between the Big Board and the London Stock Exchange, instead of a merger or takeover, at a meeting with John Thain, the NYSE chief executive, set to take place within the next week, The Times has learnt.

Thomas Caldwell, chief of Caldwell Asset Management and owner of about 2.7 per cent of the NYSE’s shares, told The Times last night that a merger or takeover between the LSE and the NYSE could create more problems than it solves. “It could be very messy, very costly and very time consuming, and to me the benefits of such a deal are not clear at all,” he said.

His comments came as Nelson Chai, the NYSE’s chief financial officer, said in a conference call with analysts that the NYSE had the ability to make acquisitions and looked at opportunities everywhere. It had a “tremendous amount of financial flexibility” because it had no debt, “which we think is a big advantage”.

Mr Chai, speaking a day after the NYSE announced higher quarterly earnings, said that the NYSE brand and the strength of its management team would also be advantages in any potential acquisition.

Mr Caldwell said that he believed the NYSE, the LSE and other international exchanges should consider striking alliances similar to those undertaken in the airline industry.

“The One World Alliance is a good example,” he said. Under such an alliance exchanges could move towards creating shared technology such as trading platforms and could use each other’s geographic location to extend trading hours.

“For example, clients could trade New York listings through London while New York is closed and the exchanges could split trading fees two-thirds to one-third or something like that,” Mr Caldwell said, adding that there were many more cost saving and revenue-generating ideas that could be pursued without the need for a traditional takeover.

“They can achieve all they need without tackling the ownership issue, without the disturbance that a deal would create,” he said.

Mr Caldwell was critical of the way Nasdaq and the NYSE were reportedly dancing around the LSE. “If you are going to punch someone in the nose, go ahead and bash them, don’t tell them you’re going to do it for weeks ahead of time,” he said. He was referring to Nasdaq’s recent purchase of a near-15 per cent stake in the LSE and reports that the NYSE has held discussions with both London and the Amsterdam-based Euronext exchange.

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