LSEG widens market maker spreads for government bonds, more ETFs

Dan Barnes

The London Stock Exchange Group has increased market-maker spreads to 5% for all exchange-traded products (ETPs), exchange-traded funds (ETFs) and UK government bonds – or gilt-edged securities, following its widening of registered market maker spreads for fixed income ETFs to 5%, announced last week.

In addition, the exchange has lowered Exchange Market Size (EMS) for gilt-edged securities traded on the Order book for Retail Bonds (ORB) to 10,000. These changes took effect from market open on Tuesday 17 March 2020 and will remain in place until further notice.

The lower bands of spreads are 1.5% or 3%, as agreed with issuers. The widening of spreads and lowering of minimum trade sizes is intended to support market makers quoting prices in volatile markets, by allowing them to factor in the potential for larger price moves and to trade in smaller size. The changes took place following consultation with market participants.

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