Chapter 16

Example STP Flows of Equity Agency Trades – When Execution Venue is the London Stock Exchange


There are a very large number of potential trade flows for equities, as the flow will vary according to whether the customer is an institutional investor or a private investor, and also according to what stock exchange the order is executed on. It is therefore not possible to provide examples of all the potential STP flows of equity trades in all the world’s major markets.

Two examples are provided in this chapter, in each case the order is to be executed on the London Stock Exchange. The examples are:

1. An agency trade with an institutional customer

2. An agency trade with a retail customer in the United Kingdom.

The chapter finishes by examining the growth of orders being executed using Direct Market Access (DMA).

16.1.1 Background to the London Stock Exchange and its trading platforms

In section 7.6.2 we learned that stock exchanges provide order-driven trading platforms, quote-driven trading platforms and hybrid trading platforms. Post-MiFID, the London Stock Exchange provides the following trading platforms.

LSE trading platforms for UK domestic securities

  • SETS (hybrid platform): SETS is the London Stock Exchange’s hybrid trading service that combines electronic order-driven trading throughout the day with integrated market maker liquidity provision, delivering guaranteed two-way prices. It is used to trade all securities in the FTSE All Share Index ...

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