Source: London Stock Exchange
The London Stock Exchange today announced the extension of SETSmm, its successful hybrid electronic order book, to cover the constituents of the FTSE AIM UK 50 index.
The extension of SETSmm to the 50 largest UK securities traded on AIM is a key part of the Exchange's strategy to build on AIM's position as the world's leading growth market and represents one of several initiatives to enhance AIM's secondary market infrastructure. Specifically, the move to SETSmm is designed to attract new investors, improve market efficiency and to increase the liquidity of the market.
The migration of securities in the FTSE AIM UK 50 index is scheduled to take place on 5 December 2005. The remaining 100 Small Cap Index securities traded on the Exchange's Main Market will also be transferred to SETSmm at the same time.
Martin Graham, Director of Market Services and Head of AIM at the London Stock Exchange, said: "Since its introduction in November 2003, SETSmm has been a proven success in improving market efficiency, narrowing spreads and delivering benefits for investors. We expect to see this success replicated for trading in the largest AIM securities. Introducing SETSmm to the constituents of the FTSE AIM UK 50 is a key step in the development of AIM and will significantly strengthen its position as the most successful growth market in the world."
Since introducing SETSmm for the trading of Main Market Mid Cap securities in November 2003 the market has benefited from tighter spreads and greater liquidity. The most recent transfer of securities to SETSmm occurred on 11 July 2005 with the movement of 200 Main Market Small Cap securities. Early indications of the performance of the stocks transferred in July have shown an average reduction of spreads of 25 per cent and an increase in trading volumes of 20 per cent.
As part of the Exchange's commitment to ensure the success of trading on SETSmm, the extension scheduled for 5 December 2005 will be subject to a review of the performance of the securities moved in July 2005. The Exchange will publish its review findings in mid October.
To allow sufficient time for the Exchange to work with customers to implement any changes required ahead of the forthcoming implementation of the EU’s Markets in Financial Instruments Directive (MiFID), the Exchange proposes no further wholesale extension of the SETSmm platform until 2007. The migration of further securities to SETSmm prior to 2007 will only take place where market conditions dictate and following market consultation.