Stock exchanges worldwide are consolidating as financial institutions embrace global operations and as regulators force exchanges to give investors the best possible prices.

The Philadelphia Stock Exchange is among potential acquisition targets, although the exchange would not confirm a report yesterday in the Wall Street Journal that it was in talks to be acquired by the Nasdaq Stock Market Inc.

"We talk to a large number of people. We haven't made a deal, and we're still exploring an IPO," said Barbara Sorid, spokeswoman for the Philadelphia exchange, which is the third-largest options exchange in the country.

Six leading options and equities traders own 89.4 percent of the Philadelphia Stock Exchange, according to a report published yesterday by Merrill Lynch & Co. Inc. research analyst Patrick Pinschmidt.

Michael Henry, a senior executive in Accenture Ltd.'s capital-markets practice in New York, said that it was still possible for a small exchange like Philadelphia's to thrive if it had innovative offerings, but that pressure to merge was increasing.

"The exchange landscape is definitely heading for consolidation. You see that everywhere," he said. "The exchange of the future will have multiple trading venues and multiple products."

That is what the New York Stock Exchange achieved through acquisitions, including last month's purchase of Euronext N.V., a European exchange.

The Nasdaq, on the other hand, failed in its recent bid to buy the London Stock Exchange. Shares in NYSE Euronext have gained 29.7 percent over the last 12 months, while Nasdaq's shares are down 27 percent over the same period.

Nasdaq, which did not return a call seeking comment on its reported talks with the Philadelphia Stock Exchange, has been trying to gain a foothold in options trading to diversify its business. The Philadelphia exchange generates about 14 percent of the nation's options-trading volume.

An option is the right - but not an obligation - to buy or sell a set number of shares for a period of time.

In the late 1990s, a proposed deal with the American Stock Exchange would have moved the Philadelphia Stock Exchange's trading floor to the New York area. Since then, the Philadelphia exchange has spent heavily on technology to stay competitive, most recently installing new servers close to New York to trim thousandths of a second off the amount of time it takes to complete a trade.

The new servers also help the exchange comply with the Securities and Exchange Commission's Regulation National Market System, which is supposed to ensure that traders get the best possible price available at any exchange in the country.

It is not clear what would happen to the exchange's trading floor on Market Street in a merger now. Electronic trading has turned trading floors into relics. Sorid, the exchange spokeswoman, said the number of people on the trading floor at 20th and Market Streets has fallen from 900 six years ago to 400 now. The exchange employs 380.

Harry Clark, chief executive officer of Clark Capital Management in Philadelphia, said that the exchange mergers were good for investors and that a deal with Nasdaq would probably be good for the local exchange. "If you're not going to be a gorilla," he said, "be part of a gorilla."

Contact staff writer Harold Brubaker at 215-854-4651 or