London Stock Exchange to add new private investor promotion

London Stock Exchange to add new private investor promotion

  • Private Client Broker tariff incentive to encourage order book access
  • Follows real-time market data pricing scheme
  • Builds on launch of retail bond market

The London Stock Exchange today announces a pricing promotion to incentivise private client brokers to offer customers the ability to direct their business straight onto the Exchange’s order books. It is the latest in a series of measures designed to encourage the introduction of services which allow private investors to participate more directly in its markets.

From 2 August 2010 private client brokers can sign up for the new pricing scheme and benefit from six months free trading when they direct clients’ orders straight through to the Exchange’s order books, followed by a special lower charge of 0.10 bps for those orders. This is a more than 75 per cent discount on the typical 0.45 bps charge under the current tariff.

The promotion is designed to encourage private client brokers to offer their clients the ability to more actively interact with the Exchange’s markets, through services such as Direct Market Access (DMA). The expected additional flows from private investors will also benefit other market participants, with the extra liquidity it brings.

Nicolas Bertrand, Head of Equity and Derivatives Markets at London Stock Exchange Group, said:

“We are working hard with brokers to make access to our markets simpler, more transparent, and more cost effective for private investors. We already have the most liquid market in Europe for trading equities and we are keen to grow the order flow from retail brokers.

“This new pricing scheme will make it cost effective for private client brokers to offer their customers the option to trade directly on the Exchange’s order book. This will complement existing methods of dealing in London-listed securities and build on the thriving retail investment community in the UK already established by the large and successful market maker community.”

The initiative has already received support from the private client broking community, with several firms set to sign up from the start of the promotion.

In the UK there are currently estimated to be 25,000 private investors who frequently trade, and approximately £20 billion, or around two per cent of value traded on the UK order book, originates from retail brokers each year. In comparison, London Stock Exchange Group’s Italian equity markets are estimated to facilitate approximately €200 billion worth of trading from retail sources annually, and there are estimated to be 150,000 private investors in Italy.

The pricing promotion announced today is the latest in a series of initiatives by the Exchange aimed at facilitating better access to financial markets for private investors:

  • The Exchange has been working with member firms to extend the availability of Direct Market Access (DMA) to retail clients.
  • In recent years the Exchange has established a highly liquid Exchange Traded Fund (ETF) market, with approximately £14 billion worth of ETF trading on the Group’s London markets in the first six months of 2010.
  • In February this year it launched the Order Book for Retail Bonds (ORB) to give private investors greater access to fixed income investment.
  • Last week the Exchange announced a pricing promotion on real time market data aimed at the private investor community, to further widen the availability of high quality order book data.

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Notes to editors:

About London Stock Exchange Group:

London Stock Exchange Group is Europe's leading diversified exchange business, incorporating Borsa Italiana and the London Stock Exchange. With over 500 member firms and more than 3,000 companies quoted across its markets, the Group operates the largest and most liquid equity marketplace in Europe.

The London Stock Exchange itself is the world's most international exchange with more than 600 overseas companies from over 70 countries. These figures include international companies quoted on the Alternative Investment Market (AIM), the London Stock Exchange's growth market, and the world's most successful market for small and medium sized enterprises with over 1,200 companies.

The Group offers trading in a wide range of instruments, holding the number one position in the trading of exchange-traded products (ETFs and ETCs) and through its interest in MTS, is Europe’s leading platform for the trading of fixed income products. Through the Order Book for Retail Bonds and Mercato Telematico delle Obbligazioni (MOT) the Group also offers a comprehensive range of UK and European corporate and government bond trading services. Its Italian Derivatives Exchange Market (IDEM) sees over €2.5 billion worth of trading every day and through EDX London the Group provides a facility for the trading of Scandinavian and Russian equity derivatives.

London Stock Exchange Group also offers post-trade services such as netting, clearing and settlement on an efficient and competitive basis. These include services from Monte Titoli, the Central Securities Depository for all Italian financial instruments, and Cassa di Compensazione & Garanzia (CC&G), which in July 2009 was granted Recognised Overseas Clearing House (ROCH) status by the FSA to operate in the UK.

With the acquisition of MillenniumIT, the Group encompasses a leading developer of low cost high performance trading platforms and financial markets software serving both the industry and the Group's own businesses.

Since February 2010 London Stock Exchange Group has owned a majority stake in Turquoise, a Multilateral Trading Facility (MTF) providing pan-European and US lit and dark equity trading in some 2,000 securities across 19 countries.