SETSmm™, the London Stock Exchange’s new trading service for mid-cap securities, is ready to go live on Monday 3 November. SETSmm combines the benefits of the world class SETS™ electronic order book with London’s unrivalled market making expertise.

The Exchange has received registrations from 31 market makers who together will support the 198 stocks traded on SETSmm. The average number of market makers per stock is eight and a half; each traded security has at least five registered market makers available.

UBS, has announced its intention to make markets in all FTSE 250 stocks traded on SETSmm while a further six market makers have registered in 100 or more SETSmm securities.

Alex Easton, Head of European Equities at UBS Investment Bank, said:
"SETSmm is an exciting new initiative that recognises the importance of market maker support in mid-cap stocks. UBS is delighted to support this new market structure which will enhance liquidity and execution for our clients."

SETSmm is a trading service for FTSE 250 securities currently traded on SEAQ, and other qualifying securities. It will be an electronic order book based on SETS with the added support of continuous liquidity provision from registered market makers. The effect will be to combine the best of the Exchange’s SETS order book with the service and expertise of the London market making community.

Commenting on the new service, Martin Graham, Director of Market Services at the London Stock Exchange, said: “SETSmm is the most significant and exciting development in UK equity markets since the introduction of SETS in 1997. The new market is a natural progression to SETS and will enable a further 198 securities to benefit from the virtuous circle of increased liquidity, tighter spreads and increased trading levels.

“We are delighted to have the support of the world’s leading market makers in this venture, and with this support we are confident that SETSmm will form the basis for a future increase in the number of securities traded electronically.”

On Monday 22 September, the Exchange introduced iceberg functionality to its trading system allowing order book participants to enter large orders onto the book while revealing only a portion to the market. These Iceberg orders are eligible for SETS and the International Order Book (IOB) as well as SETSmm, and allows users to work larger orders through the book with reduced market impact, whilst reducing price volatility and increasing liquidity.

For further information, please contact:

Notes to editors:

• http://www.londonstockexchange.com/trading/setsmm.asp

• How SETSmm will fit in:

  SETS:	The top 200 or so most liquid stocks including FTSE 100 securities and reserves
  SETSmm:	173 FTSE 250 securities 11 FTSE 250 reserve securities The top 11 UK listed Irish securities by market cap (traded in Euros) Three securities currently traded on SETS.

  SEAQ and SEATS plus support trading in the remainder of the UK market, including AIM with SEATS plus being used for those firms which have less than two market makers.

• The key features of SETSmm are:

  Continuous order book offering automatic execution
  Market makers providing continuous bid and offer prices
  Opening and closing auctions
  Trading supported by central counterparty facility and settlement in CREST or Euroclear Bank.

• SETSmm Registrations

  The following market makers have registered in 100 or more securities for the SETSmm market. A full list of all market makers and the securities they have registered in is available at www.londonstockexchange.com/setsmm.

  • UBS
    
  • Merrill Lynch International
    
  • Dresdner Kleinwort Wasserstein
    
  • Deutsche Bank AG London
    
  • Winterflood Securities Limited
    
  • Citigroup Global Markets UK Equity Ltd.
    
  • ABN Amro

• Iceberg Functionality

  Iceberg functionality allows order book participants to enter large limit orders onto the book while revealing only a portion of the order (the peak) to the market. Once the peak is fully executed a new peak will be added to the order book. This process will continue until the whole order is executed or the remainder is cancelled or expires.

• SETS – the electronic order book.

  It is now six years since the launch of SETS and the service continues to go from strength to strength. Overall, the market is benefiting from tighter spreads, greater liquidity and lower execution costs. Usage of SETS continues to grow, as shown by recent record increases in the number of orders entered, the number of firms using the order book and order book share of business.

  http://www.londonstockexchange.com/trading/sets/about_15.asp

• About the London Stock Exchange:

  The London Stock Exchange is one of the world’s leading equity exchanges and a leading provider of services that facilitate the raising of capital and the trading of shares.

  The London Stock Exchange is the most international equities exchange by trading in the world and Europe's largest pool of liquidity. By the end of 2002, the market capitalisation of UK and international companies on its markets amounted to £3.1 trillion, with £4.6 trillion of equity business transacted over the year.

  The London Stock Exchange is a Recognised Investment Exchange (RIE) under the Financial Services and Markets Act 2000 and is supervised by the Financial Services Authority.

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