London Stock Exchange to launch new retail bond market

The London Stock Exchange has announced that it will introduce a new order-driven trading service for bonds.This new electronic order book will be available for a select number of gilts and UK corporate bonds and will offer private investors with an on-screen secondary market in London-listed debt securities for the first time. This new service is expected to go live in February next year.

Pietro Poletto, Head of Fixed Income for London Stock Exchange Group, said: "London is a global centre for the listing and trading of debt, and in the current climate of low interest rates and equity market volatility, the retail appetite for bonds has increased substantially. This new initiative aims to meet that demand by offering private investors exposure to this market for the first time through transparent, efficient access to fixed income securities listed in the UK.

"London Stock Exchange Group's ‘MOT' market operated by Borsa Italiana is the most liquid and most heavily traded retail fixed income platform in Europe. We are delighted to offer the established benefits of this model to retail investors in the UK."

Over 10,000 debt securities are already admitted to the London Stock Exchange but the vast majority are currently available for trade reporting only.

The main characteristics of the new trading service are:

An electronic order-driven model, with retail-friendly order sizes, and continuous two-way trading provided by market makers.

Two new segments for electronically tradable gilt-edged securities (UK Gilts) and electronically tradable UK fixed interest securities (UK Corporates) will be introduced on London Stock Exchange Group's TradElect trading system.

The trading day will be made up of an initial opening auction phase followed by continuous trading until market close. There will be no closing auction.

All order book trades in securities admitted to the new segments will settle in CREST. Routing of trade information to Euroclear UK & Ireland will be carried out by London Stock Exchange Group's post-trade router, X-TRM.

The new trading service is not expected to impact existing wholesale bond or gilt trading and trade reporting arrangements and does not aim to change established practices in the institutional fixed income markets.