The London Stock Exchange (LSE) has successfully launched its electronic order book for bonds and has signed three firms to provide market-making services on the new platform.
The platform went live with 49 gilts and ten corporate bonds, including issues from Tesco, BT, National Grid, GlaxoSmithKline, Morgan Stanley, GE Capital, Enterprise Inns and a bond issued specifically for this new service by Royal Bank of Scotland (RBS).
The order book will offer continuous two-way pricing, enable investors to view prices on-screen and trade in increments from £1 for gilts and £1,000 for corporate bonds.
Evolution Securities will provide the majority of the platform’s market making services for gilt and corporate bonds. Market making services will also be supplied by Shore Capital Stockbrokers for corporate bonds and ABN Amro for quoting the RBS bond. The new offering will result in the creation of two new segments for fixed interest securities and gilt-edged securities on the Exchange’s TradElect trading system. Trades will be settled at UK central securities depository CREST.
According to the LSE, the new initiative is modelled on Borsa Italiana’s MOT market, which was Europe’s largest retail fixed income market in 2009, trading a total of €230 billion during the year.
“We are determined to continue expanding and diversifying our product offering while responding to the needs and demands of our customers,” said LSE CEO Xavier Rolet in a statement. “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.”
“RBS is one of the leading issuers of bonds for private investors on Borsa Italiana’s MOT platform and our ‘Royal Bonds’ have become the backbone of many personal portfolios in Italy,” added Andrea Sozzi Sabatini, head of sales EMEA and Latin America at Royal Bank of Scotland. “The LSE’s development of a similar market in the UK is a great advance and enables RBS to provide more and more British investors with the same opportunities, with the same small denominations and the same tight spreads.”