The London Stock Exchange (LSE) will add hidden order functionality to its SETS and international order books on 1 December – almost nine months after the original planned launch date.
Hidden orders, which will enable the LSE’s members to trade large orders on the exchange’s main order book without revealing price and size information to the rest of the market, were originally due to launch in March 2009, but implementation was pushed back because of technical issues.
Hidden orders can either be entered at mid-price or at a limit price and will be subject to MiFID’s large-in-scale requirements, which stipulate that orders must be a minimum proportion of the average daily turnover and market capitalisation of a stock, as defined by the Committee of European Securities Regulators, to waive pre-trade transparency. Customers will also be able to enter their own minimum execution size. Hidden orders can either be pegged to the mid-price or best bid and offer available on the market. All hidden executions will be charged at a 0.25 basis-point premium to the standard tariff.
As a result of the introduction of hidden orders, iceberg orders, which allow portions of an order to be released gradually to the market, will be moved to value-based charging, and the £0.10 fixed order entry fee will be removed. The visible portion of iceberg orders will be charged at the LSE’s standard rate and the hidden portion will be subject to the 0.25 bps hidden order premium.
The LSE has made further changes to its existing fee schedule, also due to come into force on 1 December. The SETS internaliser trading tariff for self-executed trades, previously 0.1 bps, will be removed, while the minimum £0.10 fee will now be charged per executed order rather than per execution.