Welcome to ORB. London Stock Exchange s Order book for Retail Bonds

Transcription

1 Welcome to ORB London Stock Exchange s Order book for Retail Bonds

2 Launch of ORB In February 2010, London Stock Exchange launched its new electronic bond market for retail investors the Order book for Retail Bonds (ORB) Building upon its existing experience of managing electronic fixed income markets in Italy (MOT-Borsa Italiana) and across the world (MTS-Global) Key aims of ORB were to: establish a primary market for distribution of dedicated retail bonds open up new sources of capital for companies seeking to diversify their funding develop an efficient, transparent secondary market in bonds for UK investors Page 2

3 Millions ORB primary issuance snapshot 55 ORB-dedicated new issues and 6 taps of existing ORB issues have raised more than 5.18 billion since launch 33 different issuers have successfully tapped the retail bond investor community, including: Burford Capital, National Grid, Premier Oil, Ladbrokes, Tesco Bank, Tullett Prebon, Unite Group, Provident Financial September 2015 saw the second maturity of an ORB dedicated issue Lloyds 5.375%, 7 Sept In 2015 there have been 5 new dedicated ORB retail bond issues and in 2016 already 2. 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, ORB dedicated issue amount outstanding Sep-15 Year Total Amount Outstanding ,200, ,342,700, ,853,700, ,665,200, ,191,200, ,646,000, YTD 5,180,000,000 Page 3

4 ORB secondary electronic trading ORB currently has more than 170 retail-size bonds on the platform offering a range of gilts, corporate and supranational bonds There are currently 108 corporate bonds available to trade on the ORB platform, including 4 supranationals. At launch, a number of existing retail-size bonds were made available for continuous quoting on the electronic order book, and more have been added in the last three years Additionally there are 69 gilts trading on ORB s dedicated UKGT segment, including both conventional gilts, inflation-linked gilts and some of the most popular undated issues Page 4

5 ORB secondary electronic trading There are 7 market makers on ORB providing all-day liquidity New market model introduced by London Stock Exchange when ORB was launched means investors are able to see prices on-screen and trade in bonds in a similar way as they have always done with shares Source: Proquote Widening investor base - increasingly strong demand for retail bonds from retail brokers, wealth managers and private investors as well as institutionals Page 5

6 Flexibility for Issuers Alternative source of funding - issuing retail bonds onto ORB, issuers are able to tap into a new source of funding and diversify into a new pool of retail liquidity. A retail bond can either be an alternative source of funding or complement existing channels Flexibility - ORB offers greater flexibility for issuers as the size of a retail bond can be tailored to meet issuers particular needs; issue sizes on the ORB have ranged from 11 million to 300million Structure - Retail bonds have been characterised by simple structures, however we have seen fixed, floating and index linked bonds issued onto the market Page 6

7 Transparency for Investors The high level of transparency offered by the Order book for Retail Bonds is a key benefit for : Investors: Thanks to the commitment of ORB dedicated market makers, investors can see continuous tradable prices onscreen and easily monitor the value of their bond portfolio Bond documentation for all the securities on ORB is available on the London Stock Exchange s website Issuers: continuous quoting implies that issuers are able to infer the exact current yield on their bonds at any time Regulatory supervision ORB is a EU regulated market monitored and supervised by the London Stock Exchange s Market Supervision Team throughout the trading day Strong secondary market liquidity on-book liquidity growing fast as a consequence of tightening average spreads. This also drives demand in the primary market, giving investors confidence that they will be able to trade out easily if they need Page 7

8 Market partners ORB is currently supported by seven market makers: Investec Bank and Winterflood Securities in gilts and corporates Canaccord Genuity, Peel Hunt and Shore Capital across corporate bond range Jefferies International in gilts BNP Paribas in a range of corporate securities We continue to work with market partners supporting them with PR and marketing activity to further develop ORB Dedicated partner logos may be displayed by participants Listing Fee Waiver for debt securities issued by Charities Page 11

9 Public Profile Page 9

10 Case Study Using retail bonds to finance a benchmark size transaction Company Market Sector Rating Company Details London Stock Exchange Group Plc Main Market Exchange Industry Baa1 Transaction Details Issue Date 5 Nov 2012 Money raised 300mm Yield at issue 4.75% Maturity 5yr Company profile Debt issuance story London Stock Exchange Group (LSE.L) is a diversified international exchange Group that sits at the heart of the world's financial community. The Group can trace its history back to The Group operates a broad range of international equity, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS, Europe's leading fixed income market; and the pan-european equities platform, Turquoise. Through its markets, the Group offers international business, and investors, unrivalled access to Europe's capital markets. Joint Lead Managers: Barclays, Lloyds, RBS Authorised Distributors: Barclays Stockbrokers, Charles Stanley, Halifax Sharedealing, Hargreaves Lansdown, Killik & Co, Numis Securities, Peel Hunt, Redmayne Bentley, Selftrade, Shore Capital, Smith and Williamson, Stocktrade Structure: Senior, Unsecured This is the largest corporate bond to be issued through London Stock Exchange s Order book for Retail Bonds (ORB) to date Page 10

11 Order book for Fixed Income Securities Page 11

12 Launch of OFIS In January 2014, in response to customer demand, LSE expanded order book trading to a wider range of securities and launched the Order book for Fixed Income Securities (OFIS) as a complement to ORB OFIS is an electronic trading service for order book trading of corporate bonds and other debt securities; it offers enhanced secondary market transparency and trading functionality for a broad universe of bonds OFIS supports both domestic and international debt; different segments and sectors can accommodate retail or wholesale denominated securities It also includes Multilateral Trading Facility (MTF) segments which provide the ability for member firms to trade non-london listed securities on an MTF managed and supervised by London Stock Exchange Page 12

13 OFIS order book segments OFIS offers electronic order book trading for: London listed debt instruments: Regulated market Separate sectors for retail and wholesale denominations Debt Securities not subject to the Prospectus Directive and admitted to the Professional Securities Market (PSM segment) Debt listed on another EEA exchanges Exchange regulated segment for international debt (MTF) Separate sectors for retail and wholesale denominations Dedicated trading segments for green bonds across all markets Flexible model offers end-of-day only pricing or continuous market maker quoting. Page 13

14 Disclaimer This presentation/document contains text, data, graphics, photographs, illustrations, artwork, names, logos, trade marks, service marks and information ( Information ) connected with London Stock Exchange Group plc ( LSEG ). LSEG attempts to ensure Information is accurate, however Information is provided AS IS and on an AS AVAILABLE basis and may not be accurate or up to date. Information in this presentation/document may or may not have been prepared by LSEG but is made available without responsibility on the part of LSEG. LSEG does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the presentation/document or any of the Information. No responsibility is accepted by or on behalf of the Exchange for any errors, omissions, or inaccurate Information in this presentation/document. No action should be taken or omitted to be taken in reliance upon Information in this presentation/document. We accept no liability for the results of any action taken on the basis of the Information. London Stock Exchange, the London Stock Exchange coat of arms device are trade marks of London Stock Exchange plc. Page 14

15 Contact us Fixed Income Team Lillian Georgopoulou Tel:+44 (0) Page 15