A group of seven leading investment banks have announced plans to create a new pan-European equity trading platform next year in a move that will compete with Europe's stock exchanges.
Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS said in a statement they will form a new company with an independent management team to develop the platform.
The plan comes as stock exchanges, such as the London Stock Exchange, Euronext and Deutsche Boerse, have seen their share prices rise amid expectations of consolidation.
Deutsche Boerse, however, was seriously considering dropping a bid it has made for Euronext, sources close to the Frankfurt stock exchange operator told journalists.
The management of Euronext, which runs the Paris, Amsterdam, Brussels and Lisbon stock exchanges, has repeatedly rebuffed Deutsche Boerse and is committed to a merger with U.S. NYSE Group Inc, the New York Stock Exchange operator.
The group of banks said their rival trading platform would take advantage of new European rules that come into force next November.
The European Union's Markets in Financial Instruments Directive (MiFID) hopes to create a pan-European market in financial services that will ensure customers get value for money and greater transparency.
"We are responding to the MiFID legislation by creating an integrated pan-European trading platform where equities can be traded more cost effectively, obtaining significant liquidity with greater efficiency for each and every participant in the equity markets," a spokesman for the banks said in the statement.
The banks will be shareholders in the new entity and have committed to financing it, although there was no immediate comment on how much money they each planned to inject.
The intention was to attract liquidity from across Europe and any party wishing to trade via the platform will be able to do so.
The platform aimed to "reduce the costs of buying and selling shares and promote greater transparency of equity prices and volumes," the banks' statement said.