Dec. 19 (Bloomberg) -- Jasdaq Securities Exchange Inc., Japan's biggest market for startups, is in talks with the Bombay Stock Exchange Ltd. to attract Indian companies to list on its board, a move that may help arrest a slide in trading volumes.

Jasdaq aims to lure Indian companies to sell Japanese Depositary Receipts on its Neo Market for technology stocks, said Takashi Tsutsui, chief executive officer of the Tokyo-based bourse, in an interview in Tokyo. Tsutsui said he hopes to reach a formal agreement as early as next month.

``We see opportunities to use our experience in the global market and we can do that by allying with exchanges around the world,'' Tsutsui, 57, said in an interview yesterday. ``We've basically reached a memorandum of understanding.''

An agreement with Asia's oldest bourse may help Jasdaq compete for listings with Tokyo Stock Exchange Inc., which handles 90 percent of trading in Japan and has struck alliances with the New York Stock Exchange and the London Stock Exchange this year. Daily trading on Jasdaq slumped 54 percent from a year earlier in the six months ended Sept. 30, and it forecasts a full-year loss.

Securities exchanges globally are making acquisitions and forging alliances to expand and give investors the option to trade multiple financial products round-the-clock as bourses compete to attract capital. Almost $50 billion of proposed mergers by exchanges were announced in the past two years, according to data compiled by Bloomberg.

India Trading Surge

The total market value of stocks traded in India has doubled this year to $1.7 trillion, ranking it fifth in Asia, after Japan, China, Hong Kong and Australia, Bloomberg data shows. Average daily trading on the Bombay exchange has risen 44 percent this year, according to Bloomberg data.

The agreement may extend to Bombay Stock Exchange and Jasdaq taking stakes in each other, Tsutsui said, declining to give further details. Kalyan Bose, spokesman at the Bombay Stock Exchange, declined to comment.

At home, Jasdaq faces competition from the Tokyo bourse. The Tokyo exchange, the world's second largest, plans to set up a market open solely to institutional investors in 2008 in cooperation with the London Stock Exchange, which currently operates the Alternative Investment Market.

Jasdaq converted itself in 2004 into an exchange from an over-the-counter market. Average daily trading dropped to 38.4 billion yen ($340 million) in the six months ended Sept. 30, according to a statement on Oct. 22. The bourse expects to post a group loss of 1.67 billion yen for the year through March 31.

Plans for Jasdaq

Japan Securities Dealers Association, which holds 72 percent of the Jasdaq market, has been considering options including mergers with the Tokyo bourse or Osaka Securities Exchange to boost its competitiveness. A final plan is expected to be announced on Dec. 27.

Bombay's bourse, established in 1875, has the longest history in Asia and more than 4,800 companies listed. Jasdaq, started in 1976, offers trading in 977 stocks.

An alliance with Bombay would mark Jasdaq's fourth with an overseas marketplace. The bourse has already agreed to work with counterparts in the U.S., South Korea and China, Tsutsui said.

``We've just begun taking steps forward globally this year,'' Tsutsui said.

Jasdaq is also seeking an alliance with India's National Stock Exchange to swap information including trading systems, said Tsutsui. He visited India on Dec. 3 and 4 to meet with management, including Rajnikant Patel, chief executive officer of the Bombay bourse, and J. Ravichandran, director at the National Stock Exchange.

Daily trading on the National Stock Exchange, founded in 1992, is double that of its 132-year-old rival. Officials at the NSE couldn't immediately be reached for comment.

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

Last Updated: December 18, 2007 23:23 EST