Ten of the largest investment banks in Europe have been holding secret talks since the start of the year about mounting a challenge to the London Stock Exchange's near-monopoly on trade reporting.

The plan, named Project Boat, is being led by Merrill Lynch and involves the banks building a new system through which they would report trading they carry out away from the LSE or other exchanges. Under existing regulations, brokers have to report equity trades to a recognised trading venue, whether or not the trade is executed on an exchange's system.