Chancellor Gordon Brown and Economic Secretary Ed Balls have signalled concern over an expected bid for the London Stock Exchange by Nasdaq sometime after next Monday’s deadline, but likely to be later in the year.

The word is that a £2.7 billion bid would be referred to the Competition Commission and that may take a long while to report. The worry is that a Nasdaq-dominated LSE would lose many of the overseas listings currently flocking to London.

The LSE said : “We have a very strong business which is going from strength to strength. there are a number of strategic options we would consider.”

A tie-up between the London Stock Exchange and Icap, the world’s largest inter-dealer broker, has been discussed during the summer, it has emerged.

Icap is expected to confirm today that talks have taken place. The main sticking point seems to be the current share price of the LSE, which, at more than £12 ($22.56), has all but doubled this year.

A merger would create a formidable all-British heavyweight valued at £6 billion ($11.28bn), with a strong derivatives base. It would, at a stroke, make up for the strategic defeat of losing Liffe to Euronext.

However, the complementary nature of the parties means that cost savings would be hard to find. Whereas Nasdaq might justify the high price of a bid (£12.43 is the floor price it must pay in the near term) by savings derived from rationalization, Icap would see a dilution in value after any deal.

Clara Furse, the LSE chief executive, has a lot of balls in the air as the autumn season gets underway. Buying the Scandinavian exchange OMX, is one option; various possibilities involving private-equity outfits also beckon, plus the tempting prize of Icap.

Over-arching all, however, is the American Nasdaq, which, with 25.3pc stake and a clear field of play from next Monday, remains the one to be beaten.

The UK Chancellor of the Exchequer, Gordon Brown, has supported his Treasury Secretary, Ed Balls, in underlining his wish to protect the London Stock Exchange’s listed companies from rigid U.S. rules should Nasdaq succeed in its takeover ambitions.

Brown outlined the details of regulations to be added to the new Companies Bill now passing through Parliament for addition to the statute book in 2007.

“The proposals we are putting forward,” he said, “are a reminder of what we as a country are expected to do to ensure there is no doubt as to the regulation of the Exchange. This is a national decision. It is the right thing to do.”

Paradoxically, the new rules could facilitate Nasdaq’s bid by lessening opposition in London to the new owners.

It won’t, however, diminish the sense of sell-out of this central institution to London’s place as a world financial marketplace.

At last Clara Furse and the board of the London Stock Exchange are waking up to the threat of Nasdaq and Sarbanes-Oxley regulation. It seems they are looking for a “white knight” among private equity firms.

Meanwhile, the prospect of a direct takeover of OMX, the Scandinavian and Baltic exchange operator and former bidder for the LSE, has been around for a while and seemed dormant. But as the LSE hummed and hah’d, fiery Nasdaq has let it be known that it too may bid for the company. Mysterious.

Alex Brummer, the UK Mail’s City Editor, opines : “Under the stewardship of Clara Furse we have an LSE which has enriched investors but lost global standing.”

Now we are being fed the notion that an almost £3 billion ($5.5bn) management buyout, led by Clara Furse herself and backed by private equity, would keep the aspidistra British flag flying over London soil.

Well, it’s better than nothing. Let’s see some action though before October 2 when Nasdaq is handed the golden arrow. And a deal with OMX would help protect the LSE from the new Euro-American conglomerate even now thinking ahead to its demise.