for the first time, the Bermuda Exchange has taken firm steps to improve its service.

But the Exchange, which is run by the three local banks, denied yesterday that the process was being speeded up as a result of competition from investment firm First Bermuda Securities.

Mr. Scott Macdonald, secretary of the Exchange, said: "It is a coincidence that so much is happening at the same time. Our plans to upgrade the Exchange go back several months.'' FBS started daily trading of local stocks largely because it believed the Bank of Bermuda, the Bank of Butterfield and Bermuda Commercial Bank had neglected the local stock market for too long.

The banks' way of operating the Exchange -- which involves meeting only once a week and drawing ping pong balls to see who bids first -- has been described as "archaic''.

Now more changes are expected over the next 12 months than have taken place during more than 20 years of the Exchange.

A petition by the three banks to incorporate the Exchange is published today in the Official Gazette , which is the first legal step towards incorporation.

Once politicians have given their approval, one of the first changes to the Exchange is likely to be the introduction of daily trading, said Mr.

Macdonald, who is also the Bank of Bermuda's corporate legal counsel.

But the main aim was to internationalise the Exchange by accepting foreign listings, he added.

"Some overseas companies may find it useful to have a listing outside some of the major financial centres for several reasons, including for trading during difficult time periods and for trading somewhere less tied up with rules and regulations,'' he said.

A statement yesterday announcing the new proposals said: "An incorporated Exchange will provide a focal point for development of the securities regulation necessary to enhance Bermuda's attractiveness as a domicile for international business.'' But criticism that the banks have been too slow to respond to progress were given more weight by the accompanying announcement that: "Initially, it is not intended that the trading operations of the Exchange will differ from what has been carried on for more than 20 years by the local banks in informal association.'' Yesterday, it was uncertain whether firms like First Bermuda Securities would be invited to join an incorporated Exchange.

Mr. Macdonald did not rule it out and Mr. Jeff Conyers, vice president of FBS, said his company might be interested in joining provided it was allowed to carry on daily trading.

He said: "We do not want to join an Exchange that will put restrictions on us. Theoretically, at this moment in time you cannot operate out of the Exchange if you are a member, which would preclude us from trading local shares daily. That is unsatisfactory.'' He added: "We welcome this new move by the banks. They are actually taking the bull by the horns and actually progressing after years of talk. I will wait with baited breath to see how it materialises.'' The new incorporated Exchange will be regulated by the Bermuda Monetary Authority, which, together with the Ministry of Finance, was involved in the discussions with the bank on how to take the Exchange into the future.