London market to offer exchange-traded CFDs
LONDON, Dec 15 (Reuters) - The London Stock Exchange (LSE.L) and London-based clearing house LCH.Clearnet plan to introduce exchange-traded contracts for difference (CFDs), trading alongside the underlying cash equities, they said on Monday.
Subject to approval by regulators, these will be Britain's first exchange-traded CFDs, an LSE spokeswoman said.
CFDs are derivative instruments that can give exposure to a stock without physically owning it.
The LSE will initially offer exchange-traded CFDs on FTSE 100 .FTSE stocks and LCH.Clearnet will provide the clearing services, the companies said in a statement.
"This is a real first, which has the capacity to shape the future of equity trading," said Roger Liddell, chief executive of LCH.Clearnet.
Several leading financial houses will manage equity shortages or cash funding requirements to ensure that exchange-traded CFD and equity trades are able to match against one another, contributing to the liquidity of both products.
"Introducing an on-exchange CFD contract will offer a more transparent and efficient form of CFD trading, opening up stamp-duty-free access to UK equities to a wider range of users," said Clara Furse, the LSE chief executive. (Reporting by Olesya Dmitracova, editing by Will Waterman)
