From January 4, traders in both centres will be able to deal directly on each others equity markets via a "common access package," kicking off a year that promises tumultuous change in the way stock trading is organised in Europe.

The access package, envisaged as a first step towards seamless pan-European equity trading, will give cross membership of both exchanges at reduced cost as well as creating a single point of liquidity in leading German and British shares.

"It's a first step towards the creation of a pan-European market in blue chip stocks," said a spokesman for the London Stock Exchange (LSE).

Admission and connection charges are being waived for the first year's use of the package, while CrestCo and Deutsche Boerse Clearing are offering access to their settlement systems with a one year's waiver ofthe annual standing charge.

Yet the importance of the package goes well beyond the immediate advantages being offered to investment banks. London and Frankfurt have anyway declined to reveal the takeup levels of the package and leading investment banks already have activities spanning different financial centres.

"The big deal is that it is happening; for the first time two large exchanges have got together and the whole thing is going ahead," said one industry observer.

Equally major decisions still lie ahead before European investors can be offered the single pan-European equity market that they are seeking in order to exploit the investment opportunities opened up by the creation of the euro.

Since November, six other European bourses including Paris have been brought on board the project initiated by London and Frankfurt, though the terms of their involvement are still unclear.

Questions even surround the links between London and Frankfurt, since the ownership, management, trading rules andtechnology of the new market are still the subject of discussion.

Even the identity of the estimated 300 stocks likely to be traded within the new market, and the official index or indices which will track their movements, have yet to be made clear.

Some of these issues will be addressed by London and Frankfurt during the coming year.

The two exchanges expect to agree key measures such as establishing a joint alliance company, setting common rules and regulations and providing a common computer "front end" for London's SETS and Germany's Xetra trading systems.

Only after 2000 is a single trading platform due to be created covering all Europe's leading bourses, governed by harmonised rules, fees and settlement processes -- assuming the different bourses can reach agreement.

For the London and Frankfurt exchanges, the key issue is that the project is going forward.

LSE chief executive Gavin Casey recently stressed in an interview with Reuters that he was pleased with the way the project hadprogressed so far.

"Managing changes takes a long time, but we have a statement of what we aim to do and we have got the momentum going," Casey said. "What is particularly gratifying for us is that our vision has recieved a lot of support since July...if anything the momentum has accelerated as the euro gets nearer."