Xavier Rolet has been chief executive of the London Stock Exchange for barely a week but he has already cleared a major legal dispute from his in-tray.

The Exchange today said it managed to settle a long-running wrangle today with its smaller rival Plus Markets.

According to the agreement, Plus will be able to start trading in all stocks quoted on junior market AIM.

The battle has been running for 18 months — building up sizeable legal fees in the meantime — and was due to be heard in the High Court in the middle of next month.

But today both sides said they had reached a settlement which they claim will benefit each of them at the same time as offering investors a greater choice of AIM share-trading platforms.

The dispute centred on the fact that the LSE is not only the main market for AIM stocks but also the regulator of AIM companies.

It will change its rule book to allow Plus to operate as a separate market.

No money will change hands and each side will cover its own legal costs. The change will come into effect by 1 September at the latest.