London/Frankfurt/Amsterdam - A group of powerful banks active in investments in the European market is set to take on the stock exchanges by setting up its own trading platform, financial newspapers reported Wednesday on the basis of information from the banks.
The banks were named as Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS in reports in the London Financial Times, its German subsidiary FT Deutschland and in the Amsterdam-based Financieele Dagblad.
The reports said the new trading platform would present a direct challenge to the major bourses - the London Stock Exchange, Deutsche Boerse and Euronext, which combines the Paris, Amsterdam, Brussels and Lisbon markets.
The move comes after years of sometimes acrimonious talks between the major exchanges aimed at creating a European mega-exchange. It is being announced as the New York Stock Exchange and Euronext prepare to merge.
The reports said the seven banks accounted for around half of all trading in European shares.
The banks say they could cut trading costs considerably, pointing to transaction costs in the United States that are 80 per cent lower than in Europe, according to the Financieele Dagblad.
The new exchange had been made possible by the introduction in November next year of European harmonization guidelines for financial instruments, called Mifid, the paper said.
The FTD reported that Deutsche Boerse could face difficulties. It said the Frankfurt exchange had given up plans to link up with Euronext and thus found itself without a strategic partner at a crucial stage in plans to merge the major exchanges.