London Exchange to Change Market Maker Rules to Give Brokers `Flexibility'

London Stock Exchange Group Plc, which is seeking to fend off new rivals, said it plans to change the obligations for market makers to give them more “flexibility.”

LSE proposed allowing market makers for about 350 of the biggest LSE stocks to quote prices for “at least” 90 percent of the day instead of all the time. Also, the proposal will eliminate the ability of market makers to take up to 90 seconds to refresh their quotes, ensuring that their bids and offers are replenished more quickly.

“This is in response to requests from market makers,” said Patrick Humphris, a spokesman for LSE. “They want more flexibility and this will give it to them.”

Since starting in May last year, LSE Chief Executive Officer Xavier Rolet has been trying to diversify LSE’s business and stem its loss of market share to multilateral trading facilities such as Bats Europe and Chi-X Europe Ltd. Rolet bought Colombo, Sri Lanka-based MillenniumIT last year to overhaul LSE’s technology. Millennium will replace LSE’s current TradElect system. Rolet has also changed trading fees and taken a majority stake in Turquoise, an MTF backed by investment banks.

Market markers for so-called order-driven stocks on LSE must currently start quoting prices within 90 seconds of the opening auction and refresh bids and offers that are executed, deleted or expire within 90 seconds. The 90-second allowance will be eliminated. Investors and the public can comment on the LSE’s proposed rule changes until Sept. 14.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Nina Mehta in New York at nmehta24@bloomberg.net.

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