(BRUSSELS) - Europe's investment industry enters a new era on Thursday when rules come into force ending stock exchange monopolies and requiring brokers to offer the cheapest possible prices for clients' trades.

Banks, brokerages and bourses have spent millions gearing up for biggest revamp to European securities-trading rules in 14 years, known as Market in Financial Instruments Directive or MiFID.

The package of reforms aims to spur competition in Europe's investment services industry but also to beef up protection for investors while giving them a broader choice of services.

Under the new rules, countries will no longer be able to require trades to be routed through stock exchanges, increasing the scope for more competition from other trading platforms or big investment banks.

In anticipation of the new rules and tougher competition, a wave of mergers has swept across Europe's stock exchanges in recent years while some investment banks have built rival platforms and increased their capacities to trade securities on their own accounts.

The package also requires brokers to guarantee that investors get the cheapest possible price when they execute client orders, while firms will also have to take more action to avoid conflicts of interest.

It also aims to encourage more cross-border trading in Europe by making it easier for investment firms to do business in other European countries than their own.

In particular, rules on what services finance houses can offer outside their home country, as long as they are authorised at home, will be widened to include investment advice and commodities derivatives.

The European Commission hopes the package will usher in nothing less than a revolution similar to the 1986 "Big Bang" financial deregulation in London that led to a huge surge in trading volumes and secured the city's crown as a leading finance centre.

"The cost of capital should go down over time, and this will have major benefits for the European economy," said EU Internal Markets Commissioner Charlie McCreevy.

"Last but not least, investors gain in terms of greater choice and stronger protection," he added.

Although the new rules are expected to shake up Europe's investment industry, preparations have been marred by countries dragging their feet in adopting the new regulations into national legislation.

"We expect 23 member states to be pretty much ready in the next few weeks," said David Wright, the Commission's head of financial services policy, a senior, putting Spain, Hungary, the Czech Republic and Poland in the "slowest group."

"In terms of timing we are hopeful that those four member states and all those others who are slightly behind will be up to speed quickly," he said, adding that he hoped the cases could be resolved without taking legal action.

Despite the last-minute hold-outs, the European Commission expects 92 percent of all trading on regulated markets in Europe to be covered by the new rules when they take effect.

In addition to the 27 EU member states, the rules also cover Iceland, Liechtenstein and Norway.

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