The operator of Hong Kong's stock exchange said it is keeping a close eye on advanced merger discussions between the London Stock Exchange and Deutsche Börse that could create Europe's largest exchange.

Hong Kong Exchanges & Clearing's chief executive Charles Li told reporters on March 2 that the potential transaction puts the prospect of a "pan-European exchange powerhouse on the horizon", but declined to comment on whether the Hong Kong-exchange operator would consider lobbing a potential competing bid. HKEx...