Under the agreement, which is subject to shareholder approval, SWX will transfer all trading of its blue chip shares to the market operated by virt-X. The launch of virt-X is the latest move in a flurry of pan-European activity as traditional exchanges rush to create trading platforms that transcend national boundaries and allow investors to trade directly in stocks quoted in other markets.

Europe's two largest stock exchanges, the London Stock Exchange and the Deutsche Boerse, operator of the Frankfurt Exchange, announced in May they would merge to create a pan-European market to be called iX. And the Paris, Amsterdam and Brussels stock markets are linking up to create Euronext, the second-biggest European exchange after London and which is expected to be operational in September.

Tradepoint vice chairman Richard Kilsby said Monday: "Today's launch of Tradepoint Europe is a significant milestone. "Virt-X now gives us the opportunity to take our European platform to the next stage by creating a market with a state of the art trading system and significant existing liquidity." But analysts are sceptical that the ambitions of the competing exchanges will be met.

Communications Director Justin Urquhart-Stewart of Barclays Stockbrokers said the key factor was sufficient liquidity and an array of deals would result in "stagnant puddles rather than lakes of liquidity." The only certainty was "that you are going to end up with pan-European markets." While Tradepoint is the first functioning pan-European market-place, Urquhart-Stewart pointed out that the "supranational" Easdaq is also up and running. Easdaq is based in Brussels and specialises in growth stocks.

Tradepoint said at the end of May it would launch the "first pan-European stock exchange" on July 10 and aimed to become the leading exchange for trading the 300 main European stocks by the fourth quarter of 2001.

It had also said in May that it was in exclusive talks with the Swiss exchange SWX to cooperate on the launch of its pan-Euro market. Following completion, SWX will hold directly or indirectly, some 38 per cent of Tradepoint renamed as virt-X and the Tradepoint consortium would hold the same percentage. Virt-X will be based in London and have a board made up of officials from SWX, Tradepoint and executive management, and independent directors. Chief executive Antoinette Hunziker-Ebneter of the SWX said the combination will create "a highly efficient and liquid trading and clearing and settlement infrastructure for major European equities that is not available on any of the other European exchanges.