The London Stock Exchange PLC (LSE.LN) on Thursday confirmed that it is in exclusive talks to buy alternative trading system Turquoise Trading Ltd.

The talks "may lead to a transaction," the exchange said in a statement, adding that a further announcement will be made in "due course."

Earlier Thursday, Financial News reported that Turquoise entered into exclusive talks with the exchange following weeks of a strategic review. Financial News is published by News Corp. (NWS), the owner of this newswire.

Turquoise, which is owned by nine U.S. and European investment banks, and began trading in September 2008, is one of several "alternative" trading platforms facing trading volume pressure because of the financial crisis.

Nonetheless, their existence has challenged traditional players, such as the LSE, with faster and cheaper services.

According to Arden Partners analyst Sarah Spikes, however, the LSE wouldn't have much to gain by purchasing Turquoise.

The exchange is already addressing the need to speed up its trading platform with MillenniumIT, a Sri Lankan software company it acquired last month for $30 million.

"If Turquoise is prepared to sell at a very low value, it might make sense to the LSE, but there's nothing they would get from Turquoise that they don't already have," Spikes added.

In addition, Turquoise's market share - around 3% share in European equity share trading - isn't significant enough to help the exchange, the analyst said.

UBS AG (UBS) was reportedly hired to help Turquoise in the strategic review, and it sent sales prospectuses to 18 possible buyers, including Germany's Deutsche Boerse AG (DB1.XE), the NYSE Euronext (NYX), Nasdaq OMX (NDAQ) and the LSE.

The banks behind Turquoise are Morgan Stanley (MS), Goldman Sachs Group Inc. (GS), BNP Paribas SA (BNP.FR), Societe Generale SA (GLE.FR), Citigroup Inc. (C), Deutsche Bank AG (DB), Credit Suisse Group (CS), UBS AG and Merrill Lynch, now part of Bank of America Corp. (BAC).

-By Patricia Kowsmann, Dow Jones Newswires. Tel +44(0)207-842-9295, patricia.kowsmann@dowjones.com