The JSE has made a conditional offer to buy the Bond Exchange of South Africa (Besa) for R173,22million.
Garth Greubel of Besa confirmed that the Bond Exchange had received a letter of "firm intention" from the JSE, and said that Besa needed to advise its shareholders.
"I think in the end it comes down to views on monopolies or competition. The JSE is saying greater efficiency will be achieved. Does competition serve the investor or not?" said Greubel.
The purchase consideration is R90 a share, a premium of 106percent to the net asset value, excluding the Besa Guarantee Fund.
JSE deputy chief executive Nicky Newton-King said: "We believe integrating Besa and the JSE is in line with bourse consolidation around the world and would improve South Africa's competitive ability in an increasingly international market for securities trading.
"Our interest rate derivative market is not as big as it could be," Newton-King said.
"The market is telling us that the South African interest rate market cannot continue with two exchanges and neither offering what participants really want."
She said that it was quite a way to go before the transaction would be complete, but if it did go ahead, the JSE would look at new products and new technologies to grow the market and increase trading.
Newton-King added that if the two exchanges joined forces it would help improve liquidity and lower costs for participants.
The JSE has 30 days within which to make a formal offer to the Bond Exchange, after which Besa has 14 days to consider it.