The London Stock Exchange (LSE) is due to start testing hidden order functionality on its markets from 7 September, with a view to launching the new order types to all participants towards the end of this year.
Testing will commence for hidden limit orders, hidden orders pegged to the best bid and offer price of the exchange, and hidden orders pegged to the mid-point of the exchange for the LSE’s main order book, its Baikal dark pool and for the Oslo Børs’s fixed income and equities market.
The LSE and Oslo Børs announced a strategic partnership last December, which included plans to implement the LSE’s TradElect trading engine by Q1 2010.
To prevent gaming – the practice of sending small orders to trading venues with the aim of discovering order information – participants will be able to stipulate a minimum execution size for their hidden orders.
Hidden order types are bound to MiFID’s large-in-scale requirements, which specify that orders must be above a minimum proportion of the average daily turnover and market capitalisation of a stock – as defined by the Committee of European Securities Regulators – to exempt them from pre-trade transparency.
Testing for the Baikal order book, which is due to go live in the fourth quarter of this year, will also start on 7 September. Baikal launched its smart order routing function at the end of June in partnership with trading technology provider Fidessa.