The London Stock Exchange (LSE) is to allow its members’ customers to trade directly on its equity market from 5 January.
Under the new service, called Member Authorised Connection (MAC), investors will still participate on the LSE using members’ trading codes, but will be able to place orders directly on the TradElect trading platform, rather than through brokers’ order management systems, allowing for faster trading.
The LSE is also offering a hosted MAC option, which will allow members to install a dedicated order management system for clients’ MAC orders at the exchange’s data centre, which according to the LSE, will provide sub-millisecond access to TradElect and the Infolect market data delivery system. LSE said the hosted MAC option offers its member firms the ability to eliminate network latency for their customers altogether.
“Member firms will soon be able to offer their clients a new form of low-latency access to Europe’s biggest single equity market,” said David Shrimpton, head of equity markets development at the LSE, in a statement. “This will enable them to offer an even wider range of services to their customers, creating new trading opportunities, and driving new liquidity to our markets.”
The LSE move follows similar initiatives recently announced by multilateral trading facilities. Chi-X Europe got approval from the UK’s Financial Services Authority (FSA) to launch member-sponsored access in October. BATS Europe is seeking FSA approval for a sponsored access service, and expects to launch it in early 2009.
The LSE will require members offering MAC to conduct due diligence to determine customers’ suitability to use the service, and to have adequate internal procedures and controls to handle customers’ trading activity. Members will also have to satisfy themselves of client suitability on an ongoing basis, and will be responsible for their customers’ trading activity on the LSE.