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. Assuming 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.
Commenting on the changes, Martin Graham, the Exchange’s Director of Market Services, said:
“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. 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.”
Alongside the extension of SETSmm, the Exchange will, subject to regulatory approval introduce a tailored incentive package for liquidity providers to ensure maximum opportunity for continued and deep liquidity provision in Small Cap securities.
In addition, the Exchange has set objective criteria upon which to judge whether securities are suitable for trading on SETSmm. This will 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.
In response to the recent consultation, the Exchange has decided not to implement a pilot reduction in ‘tick-size’ for five SETS securities for the time being. The Exchange will continue to discuss with customers alternative means of testing whether a reduction in tick sizes would, in practice, benefit investors across the market.
