The venture is being established in response to the European Union's Markets in Financial Instruments Directive (MiFID), which comes into force in November 2007. It is designed to reduce the costs of buying and selling shares, and promote greater transparency of equity prices and volumes.

One of MiFID's aims is to promote greater competition in share trading in Europe, and to allow the creation of new trading platforms known as Multilateral Trading Facilities (MTF). Currently, European equities are traded mostly on the relevant domestic exchanges.

The seven investment banks include: Citigroup; Credit Suisse; Deutsche Bank; Goldman Sachs; Merrill Lynch; Morgan Stanley and UBS.

Speaking on behalf of the consortium, a spokesman explained that: "Today, equity trading is concentrated on a number of domestic stock exchanges. 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."

The consortium says that it has already committed people, cash and resources to develop the project, and has already begun meetings with European regulators and authorities.

The new trading platform is recruiting its own management team, independent from the founding investment banks, which will be the shareholders.

The timing of the launch of the new platform is expected to coincide with the implementation of MiFID next year.