The NASDAQ Stock Market Inc, which operates the largest electronic stock market in the world, has warned that it may team up with investment banks in setting up a rival trading platform if its London Stock Exchange bid fails.

Bob Greifeld, president and CEO, NASDAQ Inc, said NASDAQ had held talks with the group, which plans to launch a pan-European equity-trading platform this year.

Commentators believe this to be a pressure tactic as LSE has spurred attempts by NASDAQ to force a merger between the two.

Having failed in March 2006 with a $4.1-billion bid, last November NASDAQ made a second unsolicited bid to acquire the whole of London Stock Exchange Group (LSE) Plc, which operates the largest European stock exchange. () The all-cash bid revealed announced in London today values LSE at around $5.1 billion, raised later to $5.8 billion.

However, the London exchange has consistently rebuffed the offer, dubbing it "wholly inadequate".

Nasdaq last week said it would extended the closing date for LSE shareholders to accept its 1,243 pence-per-share offer to 10 February, amid signs of a weak response to the bid from investors.

In December the LSE strengthened its defence against Nasdaq''s hostile bid, forecasting a 180-per cent rise in trades by 2008 and increasing its share buyback plans by £250 million.

"It''s a monopoly business today - it won''t be a monopoly business tomorrow," Greifeld warned. "In 18 months'' time, we will know what is the fair value of the (LSE)," Greifeld told the Uk-based Financial Times.

Greifeld told the newspaper that Nasdaq could hold on to its 28.75-per cent stake in the LSE for 18 months if its current bid were to fail, before reassessing the situation.

In a move seen as an attempt to drive down the LSE''s share price, Greifeld added that the US exchange would, if rebuffed, could consider offering its technology to the planned pan-European trading platform, known as Project Turquoise.

In another statement to the Daily Telegraph Greifeld said that Nasdaq officials had held talks with members of Project Turquoise, which include financial heavyweights such as Citigroup, Goldman Sachs, Merrill Lynch and Deutsche Bank. Nasdaq said the likely creation of rival trading platforms, brought about by new European Union regulations, would add downward pressure to the LSE''s current share price.