The Singapore stock exchange (SGX) has unveiled a multi-billion dollar bid for the company that owns the Australian Stock Exchange (ASX) in Sydney.
If approved, the $8.3bn takeover would mark the first stock exchange merger in the Asia Pacific region.
The deal would enhance Singapore as a major financial hub in the region and benefit Australian investors by giving them greater access to Asian markets.
A merged exchange would hope to compete more effectively with Hong Kong.
ASX shares soared more than 20% to A$43.49 ($43.17) after the announcement, while SGX shares fell back 4.35% to S$9.13 ($7.05).
A merger would create the second-largest exchange in the region by number of companies listed with 2,700 quoted firms.
However, in terms of market value of the companies listed, the new exchange would still lag behind Hong Kong, Tokyo and Shanghai.
SGX chief executive Magnus Bocker, said: "The capital flow we see today is really changing from West to East. This will be the gateway to Asian capital markets."
The Singapore bid values ASX at A$48 ($47.50) per share, nearly 40% higher its latest traded price before the announcement.
The offer is made up of A$22 plus 3.473 SGX shares for each ASX share.
Any merger deal would require approval by the regulatory authorities in both countries.
Graeme Samuel, the chairman of the Australian Competition and Consumer Commission, said he did not see any potential problems with the proposed deal.
"I think it's a matter between the Singapore Exchange and the Australian exchange, and I can't see that raising competition issues for us."