The Lloyd's Franchise Board this week finally pulled the plug on Kinnect, leaving the path open for private provider Ri3K to dominate electronic trading in the market.

The decision to drop the project after five years leaves over 60 Kinnect employees facing the axe and effectively writes off over

£70m of investment the market has contributed to date.

It is understood that Kinnect acting chairman Michael Dawson and Steven Haasz, Lloyd's head of change management, who inherited responsibility for Kinnect six months ago, will lend their tacit support to Ri3K in the weeks to come.

Ri3K currently operates an electronic trading platform for the reinsurance market.

The company's chief executive, Alex Letts, said: "It's desperately hard on the staff at Kinnect. We will try to find spaces for some if we can.

"Ri3K will now be able to work collaboratively with Lloyd's to ensure that the electronic marketplace does what it needs when it needs it."

According to reports the franchise board was left with little choice but to scrap Kinnect after underwriters and brokers refused to contribute any more cash to a project widely viewed as dead in the water.

In an open letter Dawson suggested the success of individual firms in facilitating electronic trading undermined the need for a centralised, Lloyd's-driven platform.

Stephen Haasz said: "The market has changed and there a number of firms that have developed their own systems.

"We have also had conversations with firms like Ri3K which are doing great things."

Alex Letts added: "The companies within the market naturally all have their own agenda, be they large or small players, or brokers or underwriters.

"That is why [the board] is so right to reposition itself as the facilitator of the electronic marketplace, rather than the builder."