The London Stock Exchange (LSE) is cutting the qualification assessment period for its high-volume liquidity taker scheme (HVLTS) so firms will have to reach volume targets once every two months rather than once every three in order to qualify.
The LSE hopes that the shortened period – which comes into force on 1 April 2011 – will encourage more consistent liquidity provision.
The scheme, which was due to end 11 March, has been extended to run until 30 June 2011 along with the FTSE 350 securities liquidity provider scheme.
Under the HVLTS, which launched on 4 May 2010, traders are charged 0.29 basis points for aggressive executions, applied to all qualifying continuous trading executions in equity and international order book (IOB) securities, excluding exchange traded funds (ETFs), commodities and products, covered warrants and orders executed on the LSE's retail bond market.
In order to qualify a firm must execute more than Â£3.5 billion aggressively in continuous trading in equities or IOB securities in at least one calendar month from January 2010 to June 2011 inclusive.
Under the new rules, to qualify for the scheme in any particular month a member firm must have executed more than Â£3bn in qualifying securities within the last two months.
Hidden orders are excluded from the scheme, although part of an iceberg order that immediately executes on entry to the order book will be included.
Also from the beginning of April, fees for on-exchange, off-order book and OTC reported trades in equities, ETFs and exchange traded products on the LSE will be reduced from 6p to 3p per reported trade.
The LSE is also introducing a fee cap of Â£800 per month for reporting trades in these securities for trade reporting participants. Trades reported by registered market makers in securities in which the market maker displays quotes will continue to be free.