The independent review of the first three months of trading provides clear evidence that SETSmm has driven down trading costs in Small Cap securities, resulting in considerable benefits to the market as a whole.
Martin Graham, Director of Market Services and Head of AIM at the London Stock Exchange, said:
“This review provides further evidence of the success of SETSmm in improving market efficiency. SETSmm has reduced spreads in Small Cap securities by 33 per cent by combining order books with the established quote driven way of trading giving investors greater choice.”
Listed companies and brokers have benefited from a marked increase in trading volumes in Small Cap securities. The first full month of SETSmm trading, September 2005, saw a 25 per cent increase in value traded against June 2005, the last full month of trading on SEAQ. Value traded in September 2005 was 77 per cent higher than September 2004.
Investors have benefited from reduced trading costs across all transaction sizes. For smaller trades, the transaction cost has been reduced by 30 per cent, and for larger trades the reduction is 10 per cent compared to trading on SEAQ in June 2005. These trading cost reductions have been driven by reduction in spreads, with headline spreads tightening by an average of 33 per cent compared to SEAQ spreads in June 2005.
Martin Graham continued:
“The market efficiencies generated by SETSmm have been particularly good news for private investors, who by our calculations have saved over £2 million in improved prices since July 2005, compared to the previous quote only system. Combined with lower private investor data charges and lower fees for brokers, we believe that these measures offer increased opportunities for our retail brokers and their clients.”
The Exchange also confirmed today that the intended migration of the AIM50 and the 100 remaining Main Market Small Caps to SETSmm will go ahead, as scheduled, on 5 December 2005.
