The London Stock Exchange (LSE) has announced the extension of SETSmm, its hybrid electronic order book, to cover 200 more securities.
The exchange will introduce a phased rollout of the changes, beginning with the migration of 200 Small Cap securities on its Main Market in July 2005. According to the LSE, if this is successful, the remaining Small Cap securities will be migrated in December 2005.
Further work with market participants will be undertaken regarding the transfer of the most liquid AIM securities to SETSmm. The transfer of the most liquid AIM securities to SETSmm is being examined in conjunction with the introduction of a new benchmark AIM index, currently under development with FTSE International.
“Since its launch, SETSmm has been very successful in increasing liquidity and reducing trading costs and we are pleased to introduce the benefits of SETSmm to 200 more securities on our markets,” Martin Graham, the Exchange’s Director of Market Services, said. “These changes will bring real benefits to companies, investors and market participants, as well as enhancing London’s position as the most efficient cash equity market in Europe.”
In addition, the Exchange has set objective criteria upon which to judge whether securities are suitable for trading on SETSmm. This will attempt to ensure that securities are trading on the optimal platform and, where a particular security does not trade as expected, it will be transferred back to a quote-driven system.
The LSE has decided not to implement a pilot reduction in ‘tick-size’ for five SETS securities for the time being. The LSE says it will continue to discuss with customers alternative means of testing whether a reduction in tick sizes would, in practice, benefit investors across the market.