The London Stock Exchange today said that it would consult the market on extending SETSmm, its hybrid electronic order book, to cover more securities following a successful start to the service, launched one year ago.

In its first year since launch, trading in SETSmm securities has amounted to £135 billion, which equates to an average daily value of £539 million. A comparison of the last three months of trading on SETSmm against the three months prior to market launch has highlighted an increase in value traded of 15 per cent. The same analysis of trading for SETS and SEAQ gives changes of 6 per cent and -3 per cent respectively.

These increases in trading have been accompanied by an almost immediate, and sustained, reduction in spreads of around 40 per cent for SETSmm securities. These reductions have been to the benefit of the market as a whole.

The popularity of the model is also underlined by the increase in market maker support for securities moved onto SETSmm. The average number of market makers registered to provide continuous two-way prices in a SETSmm security has risen to 10, up from an average of 8 market makers before they moved to the hybrid model last November.

Commenting on the anniversary of SETSmm, Martin Graham, the Exchange’s Director of Market Services, said:

“Every way you look at it, SETSmm has been a huge success. By bringing together the benefits of an electronic order book with the valuable support of committed market makers, price formation for mid cap securities has been improved and the value traded in these securities has increased. It is logical now to consider extending SETSmm to more securities on our markets. In the coming weeks, we will be consulting with market participants on the timing and extent of a further roll out of the service.”

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Notes to editors:

About SETSmm:

SETSmm is an order book for trading mid-cap securities. This extension to SETS is a hybrid market supported by continuous liquidity provision from market makers. It was launched Monday 3 November 2003.

To mark the anniversary, registered SETSmm market makers including Deutsche Bank, Dresdner Kleinwort Wasserstein, Merrill Lynch and Numis opened the market this morning by setting off The Source.

A full list of all market makers and the securities they have registered in is available at: www.londonstockexchange.com/setsmm

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