Investment banks Citigroup, Lehman Brothers, Merrill Lynch and Morgan Stanley are developing an electronic trading platform for unregistered securities in the latest move by financial services away from traditional exchange systems.

The European Commission’s Markets in Financial Instruments Directive (Mifid), which comes into force in November, will deregulate the sector and make it easier to set-up alternative trading platforms.

Falling technology prices are also a key factor.

The Citigroup plan is by no means the first of its kind. For example, Project Turquoise - set-up last year in anticipation of Mifid - is a multi-lateral trading facility (MTF) formed by seven investment banks which aims to offer trading services at a 50 per cent discount on traditional bourses such as the London Stock Exchange.

And earlier this month Goldman Sachs signed up hedge fund group Oaktree Capital and private equity firm Apollo Management to sell unregistered shares through its private e-trading system.