From Newsday.com

In a move said to be aimed at providing more competition for New York-based stock exchanges, four major financial services firms and the Boston Stock Exchange announced plans yesterday to launch an electronic stock market.

The firms forming a joint venture to build the new exchange include the brokerage arm of Fidelity Investments.

Executives of another Fidelity unit, which handles trading for Fidelity mutual funds, have criticized the New York Stock Exchange for what they have called "outdated, monopolistic trading rules" favoring NYSE members over investors.

Steve Austin, a Fidelity spokesman, said there’s no connection between the criticism and yesterday’s announcement.

He said the brokerage unit made the decision to invest in the Boston exchange, and that the mutual fund unit was "not involved."

In a joint release with the Boston exchange, Mark Haggerty, executive vice president of Fidelity Brokerage Co., said creation of the electronic exchange will "provide greater choice in competition among markets, which is vital to keeping trading costs low and insuring quality executions."

The other partners in the deal are the Manhattan-based investment banks Citigroup, Lehman Brothers and Credit Suisse First Boston. Details of their investments weren’t disclosed.

Yesterday’s announcement came about a week after four Wall Street firms, including Citigroup and Credit Suisse First Boston, announced plans to buy a combined 25 percent share in the Philadelphia Stock Exchange for a total of $19 million.

In April, the New York Stock Exchange and Nasdaq Stock Market said they would buy their electronic rivals, Archipelago Holdings Inc. and Instinet, respectively.

If those plans succeed, the two New York-based exchanges will have more than a 70 percent share of trading of stocks listed on them, according to Harrell Smith, an analyst at Celent, a research and consulting firm headquartered in Manhattan.

In the face of such market power, Wall Street firms’ investments in regional exchanges can be seen as "a little bit of a defensive mechanism" to preserve reasonable fees and good service, Smith said.

"These firms don’t necessarily want two large dominant market centers out there," he said.

Robert Hegarty, vice president of TowerGroup, a consulting firm based in Needham, Mass., said that strengthening regional exchanges will help investors because prices and service are "always better when somebody’s chasing you."

A spokeswoman for Nasdaq declined to comment. An NYSE spokesman also declined to comment.