Long-awaited facilities to trade Irish equities and bonds electronically are expected to come into operation in the next quarter. This follows the signing of a letter of intent by the Irish Stock Exchange and the Deutsche Borse. Under the deal, the German exchange will provide the Irish exchange with electronic trading facilities. A formal agreement, which will be subject to approval by the Central Bank, will be signed "as soon as possible", according to the Irish exchange. The deal follows a recent report on the future of the Irish stock market by consultant Dr Peter Bacon, in which he identified as a problem the absence of electronic trading facilities.

Last year, the Irish exchange went close to a similar agreement with the Paris Bourse, but negotiations collapsed.

Deutsche Borse, the recently renamed Frankfurt Stock Exchange, is to provide Dublin with the facilities to run its market on a special segment of the Xetra trading platform used in Frankfurt. The Deutsche Borse is the second-largest exchange in Europe and the third-largest in the world.

Irish Stock Exchange chief executive Mr Tom Healy said the agreement would position the exchange to join the emerging alliance of European exchanges. This alliance currently comprises eight international markets, including London, Frankfurt, Paris and Milan. Neither Mr Healy nor the Deutsche Borse spokesman would disclose the cost of the new facilities. Market sources speculated that the deal would be likely to involve upfront costs to the Dublin exchange of about £1 million (€1.27 million), plus ongoing fees for members comprising a percentage of each transaction.