Nasdaq has agreed to buy electronic options exchange International Securities Exchange (ISE) from Deutsche Börse for $1.1bn – the latest deal to emerge from a spate of exchange merger talks.

ISE operates three electronic options exchanges which together account for more than 15% of US volume, while Nasdaq operates another three. 

When combined, Nasdaq would command more than 40% of the market.

“The equities options business has been core to our long-term strategy, and we believe an essential component to the strength of the Nasdaq franchise,” said Bob Greifeld, Nasdaq chief executive.

“I believe this transaction advances our ambitions with all our stakeholders, including clients and shareholders.”

The deal frees up capital for Deutsche Boerse, which announced plans to merge with the London Stock Exchange Group last month - a deal which would create a European trading powerhouse of stocks, bonds and derivatives to rival operators in the US and Asia.

NYSE-owner Intercontinental Exchange (ICE) said it may make a rival bid for the LSE, raising the prospects of a takeover battle.

Reports suggest Chicago-based CME is also mulling an approach.