In its first year since launch, trading in SETSmm securities has amounted to £135 billion, which equates to an average daily value of £539 million. A comparison of the last three months of trading on SETSmm against the three months prior to market launch has highlighted an increase in value traded of 15 per cent. The same analysis of trading for SETS and SEAQ gives changes of 6 per cent and -3 per cent respectively.
These increases in trading have been accompanied by an almost immediate, and sustained, reduction in spreads of around 40 per cent for SETSmm securities. These reductions have been to the benefit of the market as a whole.
The popularity of the model is also underlined by the increase in market maker support for securities moved onto SETSmm. The average number of market makers registered to provide continuous two-way prices in a SETSmm security has risen to 10, up from an average of 8 market makers before they moved to the hybrid model last November.
Commenting on the anniversary of SETSmm, Martin Graham, the Exchange’s Director of Market Services, said:
“Every way you look at it, SETSmm has been a huge success. By bringing together the benefits of an electronic order book with the valuable support of committed market makers, price formation for mid cap securities has been improved and the value traded in these securities has increased. It is logical now to consider extending SETSmm to more securities on our markets. In the coming weeks, we will be consulting with market participants on the timing and extent of a further roll out of the service.”
