The London Stock Exchange (LSE) has disclosed details of its non-displayed limit order type, due to be launched in Q1 2009, as well as planned enhancements to its trading platform and order book.
The hidden order type will allow market participants to enter limit orders on the LSE’s SETS order book without displaying price or volume to other participants. Hidden orders will have the ability to interact with both displayed orders and other non-displayed orders.
All hidden limit orders will comply with MiFID’s large in size stipulations, which requires trading venues to implement minimum order sizes for hidden orders, based on the average daily turnover and market capitalisation of a stock, as defined by the Committee of European Securities Regulators. For securities not subject to MiFID’s regulations, the LSE will define its own large order threshold, also based on average daily turnover.
Crossing for hidden orders will be continuous and the exchange has reconfigured its execution algorithms to prioritise visible orders over non-displayed orders at the same price level. According to an announcement on LSE’s website, this change was made “to reflect the contribution of visible orders to price formation, which is to the benefit of the market as a whole.”
In addition, the exchange has detailed the next phase of enhancements to its trading infrastructure, scheduled for summer 2009. These include introducing hidden pegged orders, minimum execution size and the implementation of a FIX 5.0 interface to TradElect, the LSE’s electronic trading system.
“These developments are designed to unlock latent liquidity, increase the likelihood of execution and reduce the total cost of trading for our customers and the end investor,” said the LSE in an announcement.