MEXICO CITY – The flotation of Mexico's stock exchange this week will be a smaller show than multibillion dollar bourse debuts in Brazil, but the move away from a closed club could open the door to regional tie-ups.

The Bolsa Mexicana de Valores, known as the BMV, is due to set the price of its shares Thursday for a long-awaited initial public offer that is seen raising around $440 million.

The listing could be a step toward seeing Mexico forge links with other stock exchanges in the region and narrow the gap with Europe and the United States, where many exchanges have already merged across borders to bolster liquidity.

Spanish bourse operator BME has won approval from its board to acquire up to 5 percent of the BMV, although a company official would not say when or how it might buy a stake.

Activity on the BMV, which includes trading in debt, derivatives and interest rate and peso futures, as well as stocks, is slack compared to regional leader Brazil, but is expected to grow over time.

Brazil's BM&F commodities and future exchange raised $3.4 billion in its IPO last year, and Bovespa , which operates the Sao Paulo stock exchange, took in $3.8 billion in its market debut. They are now merging.

BM&F Bovespa Chairman Gilberto Mifano said Brazil, which handles up to 80 percent of Latin America's equity trading, is interested in building a link to Mexico's bourse and making stocks available to investors across the two countries.

“We're very glad to see Mexico going forward, preparing themselves to be an important player in the future,” Mifano said of the BMV's IPO this week.

Trading in the BMV's shares will start on Friday.

A culture of keeping businesses within families has held back Mexico's stock exchange from growing fast, experts say.

The market capitalization of companies listed on Mexico's bourse equates to 45 percent of the country's gross domestic product, compared with 124 percent in Chile and 95 percent in Brazil.

Billionaire Carlos Slim controls Mexico's largest publicly traded companies, and families of other tycoons control many of the stock market's other biggest players.

Brazil's stock exchange held dozens of IPOs in 2007, compared with just four in Mexico.

TAKEOVER-WARY

Mexico's equity market is seen expanding over the next few years, thanks partly to private pension fund savings which are worth around $83 billion and are growing steadily.

New rules for pension savings are slowly allowing fund managers to invest more in stocks and improve their returns.

Stock, derivative and futures exchanges around the world have hooked up in recent years as tougher competition and improving technology has put pressure on profit margins.

“If I'm able to offer local brokers, banks and investors a broader base of products, I'm going to avoid having them start trading in other places,” BM&F Bovespa's Mifano said.

Chicago's CME Group, the world's largest commodities exchange, is taking a 10 percent stake in the BM&F in return for 2 percent of its own stock.

NYSE Group, which runs the New York stock exchange, bought European exchange operator Euronext in 2007 for $14.6 billion. London Stock Exchange Plc acquired Italian rival Borsa Italiana, and Nasdaq Stock Market Inc has struck a series of deals, buying the Philadelphia and Boston stock exchanges and Nordic market operator OMX.

Mexico's exchange has a provision limiting investors to a maximum 5 percent stake unless they win the approval of shareholders. That suggests the BMV is not interested in being acquired by a large international player, or at least wants to avoid a hostile takeover.

“There have been more transnational exchange deals than ever before, but exchanges are a very nationalistic issue in many countries,” said Edward Ditmire, an analyst at Fox-Pitt Kelton investment bank in New York. “It's not always clear which exchanges are more likely to participate in the industry consolidation.”

(Additional reporting by Jesus Aguado in Madrid, Todd Benson in Sao Paulo and Ros Krasny in New York, editing by Gerald E. McCormick)