SEAQ
Encyclopedia
The Stock Exchange Automated Quotation system (or SEAQ) is a system for trading mid-cap London Stock Exchange
(LSE) stocks. Stocks need to have at least two market-makers to be eligible for trading via SEAQ.
In the LSE, only thinly traded stocks (those that are not part of the FTSE-100
)are traded on the SEAQ. It is a quote-driven market made by specialized and competing dealers, also known as market-makers
.
The system contains no public limit orderbook and as such, the system is not MiFID
compliant. For this reason, the LSE developed the SETSqx system which allows members of the public to display limit orders, although these orders are traded through so that typically incoming market priced orders will trade with the 'Market Makers Quotes' and not at better prices, which may be available inside the market makers Bid/Ask spreads.
SEAQ effectively gives a monopoly over all of the incoming orderflow to the market makers since members of the public cannot submit limit orders which can match with each other (because of the lack of a proper orderbook). Hence, all deals on SEAQ have to be done at the market makers prices.
Bid/Ask spreads and hence trading costs on SEAQ are typically very high due to its anti-competitive market structure.
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
(LSE) stocks. Stocks need to have at least two market-makers to be eligible for trading via SEAQ.
In the LSE, only thinly traded stocks (those that are not part of the FTSE-100
FTSE 100 Index
The FTSE 100 Index, also called FTSE 100, FTSE, or, informally, the footsie , is a share index of the 100 most highly capitalised UK companies listed on the London Stock Exchange....
)are traded on the SEAQ. It is a quote-driven market made by specialized and competing dealers, also known as market-makers
Market maker
A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. From a market microstructure theory standpoint, market makers are net sellers of an option to be...
.
The system contains no public limit orderbook and as such, the system is not MiFID
MiFID
The Markets in Financial Instruments Directive as subsequently amended is a European Union law that provides harmonised regulation for investment services across the 30 member states of the European Economic Area...
compliant. For this reason, the LSE developed the SETSqx system which allows members of the public to display limit orders, although these orders are traded through so that typically incoming market priced orders will trade with the 'Market Makers Quotes' and not at better prices, which may be available inside the market makers Bid/Ask spreads.
SEAQ effectively gives a monopoly over all of the incoming orderflow to the market makers since members of the public cannot submit limit orders which can match with each other (because of the lack of a proper orderbook). Hence, all deals on SEAQ have to be done at the market makers prices.
Bid/Ask spreads and hence trading costs on SEAQ are typically very high due to its anti-competitive market structure.