Chapter 1

Question 1

What is SETS

Answer 1

Electronic limit order book. Trading FTSE 100, 250 FTSE small cap constituents, most traded AIM and Irish securities. Also ETF and ETP( exchange traded funds and exchange traded products)

Question 2

What is SETSqx

Answer 2

Stocks that are less liquid than those covered by SETS. Combination of periodic electronic auction book with NON electronic Quote Driven Market making.
MANY SETSqx STOCKS HAVE VERY LOW LIQUIDITY , market maker cover their risk by setting a WIDE BID- ASK SPREAD

Question 3

What s a SEAQ

Answer 3

It is a quote display system. It is used for fixed -interest securities and AIM securities that are not traded on either SETS OR SETSqx

Question 4

LCH

Answer 4

LCH is the central counterparty to all SETS and SETSqx trades at the point of execution. LCH assumes the risk itself but manages it by collecting margin from members.

Question 5

What is a Systematic internalisers

Answer 5

Investment firm which deals on its own account by executing customer order flows in liquid shares outside a regulated market or an MTF.
MIFID requires to honour buy and sell prices up to standard market size. They are not able to improve their prices when dealing in retail size or with retail clients.