Next month marks the biggest change to London's stock market since Big Bang of 1986. On October 20 the London Stock Exchange (LSE) will replace its current quote-driven system of market-makers with an electronic order book - initially for the market's top 100 shares and later, perhaps, for the whole market. This innovation, accompanied by a number of other changes to trading practices and regulations, will have a major impact on both the liquidity and transparency of the stock market, But it may, inadvertently, erode the LSE's virtual monopoly on securities trading in the UK.
This technological revolution brings the LSE into line with stock exchanges in Europe and America, where order-driven systems predominate. Under the new system, orders to buy or sell shares in FTSE 100 securities will be entered on an electronic system - the Stock Exchange Electronic Trading Service (SETS) - and executed when they match. With the largest stocks accounting for the greatest volume of trading, the stock exchange predicts that 75% to 85% of its business by value should go through SETS after the new system is introduced.
This is the latest step in a gradual move away from the LSE's traditional quirky system.