Member Authorised Connection

The London Stock Exchange confirmed today that it will enable member firms to offer their customers direct trading access to Europe’s biggest single equity market through a Member Authorised Connection (MAC). Investors taking advantage of MAC will still trade using the codes of member firms, but will have direct technical connections to TradElect, giving them higher speed access to trading. The availability of a hosted MAC option will offer member firms the ability to eliminate network latency for their customers altogether. New rules governing the provision of MAC were published today, along with guidance to member firms, and will be effective from 5 January 2009.

David Shrimpton, Head of Equity Markets Development at the London Stock Exchange, said:

“Member firms will soon be able to offer their clients a new form of low-latency access to Europe’s biggest single equity market. This will enable them to offer an even wider range of services to their customers, creating new trading opportunities, and driving new liquidity to our markets.”

MAC represents an evolution of the existing order routing model. Users will continue to trade under the member firm’s trading codes, but will be able toplace orders on the trading platform directly, instead of through the member firm’s usual order management systems. Member firms will also have the option of installing a dedicated order management system to control MAC order flow at the Exchange’s data centre, providing sub-millisecond access to the TradElect matching engine and Infolect market data.

Member firms offering MAC will be required to conduct due diligence to ascertain the suitability of a customer to have a Member Authorised Connection, and must have adequate internal procedures and controls for the customer’s trading activity. Member firms will be required to satisfy themselves of their MAC customers’ suitability on an ongoing basis, and will be responsible under the London Stock Exchange’s rules for the trading activity carried out by their customers.