The loss-making United Stock Exchange (USE) is trading only in currency futures.
"The discussions for a possible acquisition of USE are at a preliminary stage," a senior official told PTI.
Without divulging any specific details, the official said that BSE is open for opportunities.
BSE is already a strategic partner in the exchange and was the single largest shareholder with nearly 15 per cent at the end of December last.
Reflecting its business challenges, USE saw its net loss widen to Rs 57.13 lakh in the three months ended December last year. The bourse had clocked a net loss of Rs 5.28 lakh in the 2013 September quarter.
Going by reports, USE's net worth is around Rs 115 crore which is only slightly higher than the minimum level of Rs 100 crore mandated under rules of market regulator Sebi.
BSE, Asia's oldest bourse, late last year had launched trading in currency derivatives. A possible deal with USE could bring in synergies for the exchange.
Apart from BSE, private sector lender Federal Bank is another major shareholder with about six per cent stake in USE at the end of December quarter.
During the same period, many leading entities including Standard Chartered Bank (Mauritius) Ltd, HDFC Bank, State Bank of India, MMTC and Jaypee Capital Services held stakes in the bourse.