This move places the LSE squarely in competition with Jiway and a number of other hopeful pan-European electronic exchanges, and is some sort of proof that the dear old LSE understands, however dimly, that its current business model is threatened by the ecn's. However, it may be just as much a response to the dissatisfaction of the small private client brokers who make up the bulk of the LSE's membership - they have been extremely critical of the LSE's handling of its aborted mergers with Deutsche Borse and Om, both of which would have brought with them access to electronic Euro-share trading.

The LSE's announcement was short on details of how the new trading system would work in terms of clearance and settlement. At least the LSE will have the advantage of reasonably good built-in liquidity if it does get something off the ground.

The move is also evidence that the LSE is not totally paralysed while it struggles to find a new chief executive to replace the ousted Gavin Casey. Speculation of internal rifts about the type of person suitable for the job suggest that it will be well into 2001 before an appointment is made. Don Cruickshank, chairman of the LSE, is understood to favour a non-industry face.