For decades, the loudest noise on Wall Street has been the shouts of traders on the floor of the New York Stock Exchange. But lately, fierce debate in the financial district's boardrooms has threatened to drown out the traders' cacophony.

The oligopolistic structure of the US equity market, the world's biggest, is breaking up, and everybody, from Wall Street's largest securities houses to the online stock trader, has an interest in what will replace it.

The debate is being given added urgency by the extraordinary growth in online trading, which is expected to account for nearly half of all retail equity trades in the US by the end of this year. Expansion of afterhours trading is also putting pressure on the existing systems.

Decimalisation of US stock prices in July will increase volumes by allowing investors to buy and sell in increments as low as a penny. And looming on the horizon are European exchanges, which have already adopted electronic trading systems, and ventures such as Tradepoint, which aims to offer efficient cross-border trading of European stocks.

Last week the pace of change stepped up a notch, when the Senate banking committee came to Wall Street to discuss the future structure of the markets. In an overcrowded room at the Securities and Exchange Commission's New York offices, the heads of several investment banks squared off against the oligarchs who run the NYSE and Nasdaq, the electronic stock market that until recently has posed the greatest threat to the Big Board.

Mr Richard Grasso, chairman of the NYSE, and Mr Frank Zarb, chairman of Nasdaq's parent group, the National Association of Securities Dealers, have rarely seen eye to eye on any issue, so their alliance on the market structure debate was itself a sign that Wall Street's old certainties are coming apart.

But by the end of the week it had become clear that an alliance of common interest might be only the first step in a wider restructuring. The two organisations confirmed that they had held informal merger talks, a move that would have been unthinkable just a few years ago.

For now, any serious plan to combine the two has been put on hold. But the US stock markets have crossed into that realm where almost anything that can be imagined is possible.

The uncertainty is the result of five years of breakneck technological progress and regulatory upheaval, which has unsettled the old order on which the NYSE and Nasdaq had built their dominance.

Within the US, the growth of fast-moving electronic communications networks (ECNs) and the ability of large institutions to carry out many of the largest "block" trades without using the NYSE or Nasdaq are the most visible challenges to the dominance of the two established markets, especially the more centralised NYSE.

"The real challenge ahead for the NYSE is to explain to the large institutions why they should continue to funnel their trades to the floor of the exchange," says Mr Joel Seligman, dean of the Washington University School of Law in St Louis.

The auction-based NYSE traces its roots in lower Manhattan back to the late 18th century. The supremacy of that model went unchallenged until the screen-based Nasdaq market emerged.

In the last three decades, Nasdaq has prospered by offering riskier high-technology start-ups a chance to raise capital in the public markets, even if they cannot meet the rigid listing requirements of the NYSE or other regional exchanges. The validity of its approach has long been demonstrated by the success of world-class Nasdaq-quoted companies, including Microsoft, Intel, Cisco Systems and, more recently, Amazon.com.

But although both the NYSE and Nasdaq now combine human interaction and sophisticated technology, their trading systems could not be more different.

The centralised floor of the NYSE is run to a great extent by "specialists", who manage the order flow of listed stocks and at times step in as buyers or sellers of last resort. The Nasdaq has no central floor, but is spread across the screens of thousands of market-makers who engage in a daily rough-and-tumble scramble for trades.

Those two systems can coexist. Until recently, Nasdaq stocks have traded mainly on the Nasdaq system, and NYSE stocks mainly on the Big Board, so the main competition between the two has been for new listings, rather than trading volume.

But a set of regulatory changes in the mid-1990s allowed for the growth of a new pack of challengers, the ECNs, which now create separate points of access for the matching of trades, mainly in Nasdaq stocks.

At issue at last week's Senate banking committee hearing was whether the SEC, the chief securities market regulator, should link the NYSE, Nasdaq and the growing tribe of alternative trading systems to create a central pool of stock quotes. Broadly, the investment bankers who included the heads of Merrill Lynch, Goldman Sachs and Morgan Stanley Dean Witter argued in favour of such links.

The NYSE's Mr Grasso and Charles Schwab, chairman of the leading online and discount brokerage, both countered that such a centralised system would stifle innovation and reverse the improvements of recent years, during which trading and competition has flourished.

The interests of the main participants in the debate may be closer than appeared from last week's discussions. All want access to best-price quotes, and a regulatory system that treats them in the same way. All are aiming for a more unified, less fragmented market.

The real question, it seems, is what catalyst will make sworn rivals in the US equity markets compromise on a combination of competition and consolidation that is in everybody's best interests.