SGX's weak denial fans flames of LSE merger talk That means if SGX were to make some form of formal approach within the next six months, that statement would not preclude it from doing so. In other words, the statement simply kept SGX's options open. The second part of the statement - "open to collaborations and partnerships" - is perhaps the most telling part. SGX and LSE recently announced a deal whereby leading companies on both bourses can be traded on the other, boosting liquidity and heralding a new partnership. It now seems clear that those talks have gone further, with some form of co-operation on derivatives also likely. This will please LSE chief executive Xavier Rolet, as he tries to further diversify the company's income streams away from pure equities. But it is still my belief that this is about more than working together in partnership. Both exchanges have in the past tried and failed to play a leading role in the wave of consolidation that constantly eludes the global exchange industry. And although Rolet has suggested that he thinks the more sensible growth option is via piecemeal acquisition - as in its pending purchase of LCH.Clearnet and snapping up the 50pc of FTSE International it did not already own - he is a man with clear ambition - ambition that would be achieved by such a transformational deal. Of course, combination does not have to mean a full-blown takeover. Sources point to Borse Dubai's 20.6pc stake, and the possibility that SGX could take a strategic investment in LSE by taking over the Dubai stake. It is known that at the time of LSE's botched merger with TMX last year, Borse Dubai was a willing backer, but was hoping to exit its stake over time through the process. Although it originally paid £14.14 a share for the stake, the TMX deal would not have delivered similarly priced returns - indicating that it could well be willing to exit around current levels. Management within the Dubai hierarchy has changed since last summer and the stake sale is one possible way SGX and LSE could further combine forces. SGX may not yet be ready to commit to a full-blown marriage with LSE, but that does not mean further moves towards unity will not be forthcoming. There is no smoke without fire. And this relationship is starting to smoulder.