The London Stock Exchange's electronic retail bond trading service has gone live, opening up the market to private investors.
The electronic order book for retail bonds provides continuous two-way pricing for trading in UK gilts and retail-size corporate bonds on-exchange for the first time.
Investors see prices on-screen, increasing transparency, and trade in increments as low as £1 for gilts and £1000 for corporate bonds, which are normally issued in units of £50,000.
Initially, 49 gilts and ten corporate bonds from blue chip firms are available for trading, including one issued specifically for the new service by Royal Bank of Scotland.
The market is supported by dedicated market makers, with Evolution Securities committed to a leading role. Shore Capital Stockbrokers will also make markets in corporate bonds and ABN Amro is committed to quoting in the new RBS bond.
The new initiative, modelled on Borsa Italiana's MOT market which saw EUR230 billion worth of trading in 2009, was welcomed by the government and opposition party.
Lord Myners, financial services secretary to the Treasury, says: "Economic growth depends on individual businesses being able to raise the funds necessary to operate and flourish. I welcome the launch of the London Stock Exchange's new bond market today, which will offer companies a new route to access capital that is vital for growth, benefiting the wider British economy."
Xavier Rolet, CEO, LSE, adds: "We are determined to continue expanding and diversifying our product offering while responding to the needs and demands of our customers. There has already been considerable interest in this new platform from issuers, member firms and private investors, and we look forward to further facilitating that growing interest as the market establishes itself over the coming months."
Separately, the LSE is considering acquiring Dutch clearing house European Multilateral Clearing Facility (EMCF), according to the Financial Times.
Citing sources, the paper claims the exchange is interested in the 78% stake in EMCF held by Fortis Bank, owned by the Dutch government, as a way of forming a pan-European clearing house.