A German magazine is reporting that German stock Exchange, Deutsche Borse has developed a plan to merge with New York-based, NYSE Euronext.

The deal, which would create thw world’s biggest stock exchange group, would combine the businesses in a holding company in the Netherlands.

According to the report, Deutsche’s Chief Executive Reto Francioni, has presented his supervisory board with proposals for the merger.

The implications for the London Stock Exchange are not entirely clear, but must be worrying given the general economic climate.

A new wave of exchange consolidations seems imminent, following Nasdaq’s £1.9bn ($3,7bn) agreed bid for Scandinavian group OMX.

Now energy market, New York Mercantile Exchange, is seeking partners for a possible $7.2bn ($14.2bn) deal going forward. Touted parties include NYSE Euronext, Chicago Mercantile Exchange and Deutsche Borse.

Nasdaq has denied that it could return for a third battle with the London Stock Exchange, but that could change come February since the American outfit already owns nearly 30 percent of LSE shares.

The Chairman of the London Stock Exchange, Christopher Gibson-Smith, recently gave an interview to The Times (London) considering a number of possible outcomes for the business going forward.

In the wake of the comprehensive defeat of the Nasdaq bid, what threat is posed by the new giant forming across the water in Paris between Euronext and the New York Stock Exchange?

“What’s going to happen”, says Gibson-Smith? “I don’t suppose they know. We watch it really carefully, but it’s not a short-term threat.”

He also dismisses any increased competition arising from Mifid, the new EU directive on financial services, and the prospect of Project Turquoise, a rival trading platform from a consortium of powerful banks. Mifid, he says, offers more opportunities to the LSE than dangers, and more of a threat to continental rivals. “They have tried it before and not achieved it. They might this time. We don’t [believe they will]. We feel confident in being able to deal with it.”

The Chairman points out that the LSE is growing trading volumes by 55 percent a year driven by algorithmic trading, which allows business to be conducted electronically at high speed. “[The system] is transforming capacity to use our transformed market”, he says. “I see a world awash with opportunities.”

However, on global markets, he’s more cautious, “There are some real national barriers in the way of achieving that.” And will the NYSE/Euronext giant come gunning for the LSE? “It’s filling column inches, but …”

Philosophical to the end, Christopher Gibson-smith opines, “There have never been, in my entire business career, fewer than five huge uncertainties that have to be dealt with”.

Whatever happens, it’s obvious the Chairman of the LSE does not intend to be caught napping.

The London Stock Exchange is to announce a partner arrangement with its Tokyo counterpart.

A business cooperation agreement will be signed in London today between the two exchanges. The plan is to share technology and information with a view to boosting dealing volumes.

Following the LSE victory over a hostile bid from Nasdaq, the move is designed to underpin London’s ability to remain independent while increasing its influence in rapidly changing times.