Clara Furse is taking on 'the toughest job in the City'

Mrs Furse is the first woman in such a senior post in the stockmarket's 228 year history.

The chief executive position was created 27 years ago.

Mrs Furse's main task will be to define a new strategy for the exchange, which has been shaken by the collapse of its plans for a merger with German rival Deutsche B�rse and the failed take-over attempt by Swedish upstart OM Group.

The stock exchange has obviously been through a period of profound change and clearly that change will continue

Clara Furse

A year ago, the London Stock Exchange was transformed from a mutual society into a company listed on the stockmarket, and Mrs Furse will now have to convince restive shareholders that she is the right executive for the job.

Mrs Furse said the exchange had "obviously been through a period of profound change and clearly that change will continue".

Her appointment ends the long search for a chief following Gavin Casey's departure last autumn.

The LSE's chairman, Don Cruickshank, said Mrs Furse brought "considerable character, business experience and IT expertise" to the job.

He praised her "knowledge of European and global operations", which would be of "immense value to the Exchange as we widen and strengthen the scope of our European business and meet the demands of market users in an increasingly competitive and globalised business environment".

Reports that she was the chosen candidate first surfaced on the internet on Tuesday. The official approval by the board of the London Stock Exchange on Wednesday was seen as a mere formality.

International expertise

Mrs Furse is a former head of the French bank Credit Lyonnais' derivatives business.

Some observers believe her international background would be beneficial to the exchange at a time dominated by cross-border mergers and acquisitions between stock exchanges.

Her derivatives background would also be beneficial given that the exchange is planning to expand in this area.

Mr Casey's departure followed the collapse of the LSE's merger talks with Deutsche B�rse.