The European Commission has unveiled controversial new proposals on share trading which allow securities firms to bypass traditional stock exchanges - but only after an 11th-hour compromise which is likely to anger big banks and brokers.

The Commission has accepted the increasingly widespread practice of internalisation, whereby securities firms bypass exchanges. However, after a late intervention by Commission President Romano Prodi, the proposals to increase competition between exchanges appear to have been watered down. The new proposals will require pre-trade transparency on all trading that is internalised within or between banks.