Instinet's European equities trading system, Chi-X, has emerged as the front runner to become the technology supplier for the trading venue announced by seven investment banks this month.

Brokers and the IT subsidiaries of Europe's stock exchanges are racing to be appointed to the project. Atos Euronext Market Solutions, Euronext's system developer, and OMX, the Nordic exchange and trading platform vendor, have also contacted the investment banks, according to a banker close to the project. Icap, the world's largest interdealer broker, and virt-x, the Swiss-owned exchange, have declared their interests. One source said: "The banks are preparing a document that sets out what they want but all sorts of people are coming forward. Chi-X is the closest solution to what they want of the systems they have seen so far. "Perhaps the main stumbling block is whether the banks are prepared to do a deal with an investment bank that is not in the group." Instinet is the subject of a $1.2bn (€940m) takeover by Japanese investment bank Nomura. As well as Instinet and Icap, exchanges are weighing up the opportunity. The source said: "Euronext, OMX and virt-x are in there too, but it won't be awarded to a company affiliated to one of the large exchanges. There will be other entrants coming out of left field, I suspect." Peter Gomez, chairman of virt-x, said last week: "It is extremely complex to set up a new exchange from a technological and regulatory point of view. One scenario might be to see if they can use an existing platform. Virt-x would be an obvious candidate." OMX refused to comment on its involvement and Atos Euronext Market Solutions did not return calls. Michael Spencer, chief executive of Icap, said last week the plan to develop a new trading platform was "credible", before outlining his group's credentials as a platform provider.