Icap, the UK-based inter-dealer broker, and the London Stock Exchange spoke with each other three times over the summer about a possible merger but Icap ended the discussions about three weeks ago.

The two companies began discussions about a merger in June. It is understood that Michael Spencer, Icap chief executive, ended the talks three weeks ago because of concerns that the LSE’s share price – boosted in recent months by takeover speculation and strong earnings growth – was too high, and would dilute the value held by Icap’s shareholders. Mr Spencer owns just over a fifth of Icap.