The Wall Street Journal's European edition reported on Monday that two of Germany's leading banks, Commerzbank and Dresdner Bank, have verbally agreed to back the proposed new trading system.

Each of the banks would be required to invest about 1.2m euros, in return for a 10% stake in the enterprise, the Wall Street Journal said, citing unnamed sources.

The new exchange, based around an electronic trading platform, is scheduled to go live in January next year.

Expansion

It would launch with an initial listing of about 300 German and US stocks, later expanding to about 3,000 shares.

The new system would compete directly with Deutsche Boerse, which currently has a near-monopoly on Germany's equity clearing and settlements market.

Nasdaq's foray into the German share dealing market could stymie the launch of Deutsche Boerse's own proposed electronic trading system Xetra Best, planned for September this year.

Nasdaq is hoping its system will capture market share from Xetra Best by offering more competitive fees to brokers and banks.

Japan setback

The German venture opens a new front in Nasdaq's drive to expand internationally.

Nasdaq is also thought to be pursuing a merger with the London Stock Exchange.

But its attempts to launch a global exchange linking US, European and Japanese stock trading received a setback in Japan on Monday.

Nasdaq Japan said in a statement that the Osaka stock exchange had delayed implementation of the new system.

The end of the technology boom has hurt Nasdaq Japan's performance.

It has listed just 95 companies in Japan to date, falling short of its target of 230.