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Subject: Re: Extension of SETSmm down to AIM	Date: 21/11/2004 14:54
Author: insidernontrader	Number: 60427 of 141821
Reduction of tick sizes looks good to me, but hardly seems something that'll set the world alight. I guess MMs are against it since it reduces their trading profits a bit, but it's hardly a big deal to me. The private client investor may well benefit from this, and it is the market makers who will suffer, but I agree, that is not really a major problem. They are big enough to look after themselves. Of course it will likely mean that the days of price improvements have gone. What I particularly want is the extension of SETSmm, so that I can enter my own trades onto the order book in (more or less) all shares. If I have read what you have said correctly, you are dealing in CFDs rather than directly in the market so you will benefit enormously. The direct equity investors will win in some ways, lose in others. If you put a shape up directly on the order book, sometimes it will be taken in one go, sometimes it will take a number of bites. It is this which will affect people because the settlement costs go up and this will of course be passed on to the client. Obviously a lot of the dealing will be done on the phone which will avoid placing the orders on the screen and the risks of that. It is this that I think could have the biggest impact on many readers of this board. The RSPs will be most concerned about depth and I can see them being most concerned about online trading. I would not be surprised to see who use internet brokers finding some sizes more restricted that they are used to. From what I have been hearing, the SETSMM move is not bothering too many people in the market, certainly I have not spoken to many people who are concerned, although I am very much on the buy side and don't have much contact with the sell side these days. The people I work with know they may have higher costs but expect this to be countered by improved prices. I think that it will be a while before anyone can make a meaningful stab at the overall cost or benefit. Internet broking is such a small part of the business that it can be largely ignored. It is the 0.1p tick size that I keep hearing about and how furious some of the market makers are. Apparantly at the APCIMS conference, the delegates from one of the market makers were in such a huff they didn't even go to any of the social events.
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