SETSmm, will be a new trading service for FTSE 250 securities currently traded on SEAQ, and other qualifying SEAQ securities. It will be an electronic order book based on SETS with the added support of continuous liquidity provision from committed market makers. The effect will be to combine the best of the Exchange's SETS and SEAQ trading services.
The move follows widespread discussions with market participants from which the Exchange has drawn up a new service proposal designed to:
- Strengthen the central market
- Maximise efficient and effective price discovery
- Open up the market to a wider user base
- Guarantee continuous liquidity provision
- Attract broad market support
- Foster greater transparency in price formation.
- Continuous order book offering automated execution
- Opening and closing auctions
- Market makers providing continuous bid and offer prices
- Trading supported by central counterparty facility and settlement in CREST or Euroclear Bank.
These trading service enhancements are the latest of a number of market developments since the Exchange's launch of SETS in 1997. Previous enhancements have included auction functionality and the introduction of a Central Counterparty and settlement netting facility. In the period since its launch, SETS' market share of eligible equity trading by value has increased from 48 per cent to around 66 per cent.
Clara Furse, Chief Executive at the London Stock Exchange, said: "SETSmm will increase the number of securities traded on SETS. The benefits will include tighter spreads, lower transaction costs, greater transparency and improved liquidity for the FTSE 250 stocks." The Exchange is aiming to launch SETSmm and iceberg functionality in September 2003.
