The cost of cross-border share trading in the European Union should fall dramatically after stock exchanges and clearing houses yesterday signed up to a common code of conduct ushering in greater competition.

Experts said that prices could drop by up to one-half from January 1st next year, when signatories guarantee price transparency.

Euroclear, the Brussels-based settlement and clearing house,yesterday pushed competition further, saying that it would extend the terms of the agreement to all the asset classes that it settles, such as bonds and listed funds, at the same time. The code calls for those to be added at an unspecified future date

"I think we are raising the bar," said Euroclear. It said that the technology that made it possible for equities settlements to be made interoperable was easily extended to other asset classes. "There is no reason for us not to do it," said Euroclear.

Charlie McCreevy, the European internal market commissioner who brokered the deal, hailed the conclusion of 17 years' of discussions. He said that he had opposed legislation because it was too cumbersome.

Mr McCreevy said that there was also disagreement among member states, however, the spectre of Commission lawmaking had helped bring the parties together.

He also warned that legal action could still be taken if companies did not keep their word.

"This is a litmus test, a touchstone, for better regulation. It is in the [ signatories'] best interests that it works," he said.

Karel Lanoo, chief executive of the Centre for European Policy Studies (CEPS), a Brussels think-tank, said the price of cross-border deals could be halved since margins were so high.

A CEPS study in 2001 found that intra-EU international transactions were eight times more expensive than US ones and margins for providers averaged 30 per cent. Since then, cross-border trading has boomed.