Swiss banking software firm Temenos and larger UK rival Misys said on Tuesday they had agreed to a number of key terms on a possible all-share merger that could create one of the world's largest standalone financial software companies.

The exchange ratio will be 4.1 Misys shares to 1 Temenos share, leaving Misys shareholders with 53.9 percent of the combined group and Temenos shareholders with 46.1 percent after accounting for options outstanding but excluding Misys' convertible bond.

On Friday, the groups were reported to be in talks about an all-share merger in response to weak demand from their customers, six months after another suitor dropped a bid for Misys.

(Reporting by Martin de Sa'Pinto; Editing by Bernard Orr)