New York/Toronto: Nasdaq OMX Group Inc could launch a rival bid for NYSE Euronext to avoid being left out of a global merger frenzy among exchanges, a source said.

This is one option Nasdaq, valued at $5.7 billion, is considering as a spate of deals shakes up a global industry under intense cost pressure from upstart electronic rivals.

Looking to press home a merger between Toronto market operator TMX Group Inc and the London Stock Exchange, the head of TMX warned Canadian lawmakers opposed to the tie up that the country risked damaging its free-trade credentials if it blocked the agreed deal.

TMX Chief Executive Thomas Kloet told Reuters in an interview he was taking political opposition to a deal 'very seriously'.

Even so, he said Canada was putting its reputation on free trade and competition on the line as it considers a proposal to create a transatlantic operator worth $7 billion in market value and the world's fifth-largest exchange ranked by trading volume.

"One of the things Canada has to make sure to consider as it goes through this is what if it says no," Kloet said.

While the agreed merger of LSE and TMX has piqued the interest of industry experts, the merger talks between Deutsche Boerse and NYSE Euronext is drawing comparisons with the Chicago Mercantile Exchange (CME), the world's biggest derivatives marketplace.

Nasdaq focuses on intensely competitive, low-margin equities trading, so may feel vulnerable to more price-competitive exchanges that could result from the wave of merger plans.

A source familiar with the matter told Reuters that Nasdaq's alternatives include the possibility of tying up with IntercontinentalExchange Inc or CME to wrest NYSE Euronext out of its planned $10.2 billion takeover by Deutsche Boerse.

The source asked to remain anonymous because the talks are private.

The Wall Street Journal said Nasdaq may also consider selling itself or buying another competitor if it is unable to compete with Deutsche Boerse on the NYSE deal. A Nasdaq spokesman was not available to comment.

NYSE Euronext and Deutsche Boerse dominate futures and options on European bonds, shares and rates, with Deutsche Boerse's Eurex unit focused on the long end of the interest rate curve and NYSE Euronext's Liffe unit on the short end.

The Deutsche Boerse-NYSE Euronext merger would give the combination annual trading volume exceeding $20 trillion but to succeed it needs approval from a host of regulators.

A $7.9 billion bid by Singapore Exchange for the Australia stock exchange operator ASX Ltd late last year kicked off a wave of industry consolidation last seen just before the global financial crisis.

Asia however runs the risk of being left behind in the sudden wave of transatlantic stock exchange consolidation, given its tough regulatory regimes, cumbersome ownership structures and protectionist minded governments.

Thailand's market regulator said on Wednesday that most of South East Asia's stock exchanges are several years away from getting involved in the global wave of bourse consolidation.

Exchanges in Malaysia, the Philippines, Singapore, Vietnam, Indonesia and Thailand are setting up electronic trading links between their markets with the eventual aim of having cross-border dealing in all their listed shares.

The exchanges of Southeast Asia, including Indonesia and Vietnam, have a combined capitalisation of about $2.4 trillion and were the darlings of emerging market investors last year.

But the ownership structures of these bourses - with the exception of Singapore - means full-blown mergers or acquisitions are not an option.

"Right now the only linkage is through the electronic means of this project, and that is the only likely option for now," Tirachai Phuvanatnaranubala, Secretary General of Thailand's Securities and Exchange Commission, told Reuters in a phone interview.