Two of the world's biggest investment banks have teamed up with a rival of the New York Stock Exchange to offer a new electronic trading system. The partnership between Merrill Lynch, Goldman Sachs and Bernard Madoff Investment Securities, which trades shares on several US exchanges, aims to be the first to offer an auction-based market on the Internet. As such it represents a direct threat to the NYSE, the world's largest exchange which has long extolled the virtues of auction-based trading.

As loyal members of the NYSE, Merrill and Goldman rarely give orders outside it. Analysts considered their participation in the new venture particularly significant. However, the banks sought to play down the impact on the traditional exchange.

Primex Trading, the name of the new company which will begin operations next year, claims to be unique in Internet trading in its ability to find the best price or buyers and sellers irrespective of the order. Primex could eventually enter into an alliance with traditional exchanges such as New York or Nasdaq, the exchange dominated by technology companies.