CME Group in advanced talks to buy Britain's NEX for $5.4 billion

Men enter the CME Group offices in New York, U.S., October 18, 2017. REUTERS/Brendan McDermid

(Reuters) - U.S. exchange operator CME Group CME.O is in advanced talks to buy Britain's NEX Group NXGN.L for about 3.8 billion pounds ($5.4 billion) to create a cross-border trading powerhouse.

NEX, formerly known as ICAP, said on Wednesday that CME Group had made a takeover proposal of 10 pounds per share, a premium of around 3 percent to the stock’s closing price.

Talks with CME - one of the world’s biggest exchange groups that owns the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange - are at an advanced stage, NEX Group added in a statement after the market close.

NEX, a financial technology company that matches buyers and sellers of bonds, swaps and currencies, said there was no certainty an offer would be made.

NEX shares closed 9.8 percent higher at 972 pence.

The stock has risen more than 40 percent over the last two years as market volatility triggered by political surprises - such as the election of U.S. President Donald Trump and Britain’s vote to leave the European Union, fuelled trading on its platforms.

Attempts at blockbuster exchange mergers, such as between the London Stock Exchange (LSE) and Deutsche Boerse, have hit antitrust buffers in recent years, and buying NEX could be easier for regulators and politicians to accept.

CME Group closed two operations in London last year after they ran up losses of more than $100 million, saying its customers preferred using its U.S. operations.

($1 = 0.7089 pounds)

Reporting by Justin George Varghese and Parikshit Mishra in Bengaluru; Editing by Shailesh Kuber and Mark Potter