LSE Lowers Fees for Active Traders

Terry Flanagan

The exchange will look to implement a new pricing system in order to boost liquidity.

The London Stock Exchange next month will implement a new fee structure for its equities and securities traded on its International Order Book.

Under the new fee structure, slated to go into effect Oct. 3, member firms will have the option of selecting two pricing systems. The first, which has a subscription fee of £50,000 ($78,645) per month, will charge liquidity takers 0.15 basis points, while the second option will charge takers 0.28 basis points for a monthly fee of £5,000.

“This gives incentive for people who trade at a higher volume, they will access a rate that’s much cheaper than competitors,” said an LSE spokesman. “This new rate for higher volume traders is significantly cheaper than what’s offered from the likes of Chi-X or Bats and other multilateral trading facilities.

The new pricing promotion is scheduled to begin Oct. 3 and will last through the end of March 2012. The company is keeping open the possibility that the pricing system could be extended beyond that, according to the spokesman.

Its previous pricing system, which had been approved by the FSA and launched in April 2010, gave certain active traders reduced fees once they reached a certain amount traded. The UK regulatory authority later expressed concerns regarding the pricing scheme, in that it would entice certain trading houses to trade just to get up to and beyond that specified level and get that lowered rate, according to the LSE spokesman. “They felt it would be better for people just to trade for trading sake,” he added.

The older pricing system will remain an option for those who do not wish to participate in the new scheme. Under the standard pricing structure, members are charged 0.45 basis points for the first £2.5 billion worth of orders executed, 0.4 basis points for the next £2.5 billion, 0.3 basis points beyond £5 billion traded, and 0.2 basis points for all trades after £10 billion.

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