Why issue

The electronic Order book for Retail Bonds has already generated significant interest from a wide variety of market participants. While it is dedicated to meeting the fixed income needs of private investors, it is the diversity of customer types who see opportunities in this new market that offer the key to its success as the electronic order book provides a transparent and efficient mechanism for bringing these different customers together.

It is expected that the benefits of extending transparency and liquidity in retail-size fixed income securities will increase distribution for bonds by opening up the market to private investors who may have previously felt excluded - facilitating new flow for private client brokers and opening up new pools of capital for issuers seeking access to large pools of retail liquidity.

"The development of a liquid, transparent secondary market for retail bonds brings into focus the benefits of retail issuance programmes as an additional source of funding for companies wishing to raise capital from a wider pool of investors."
Pietro Poletto, Head of Fixed Income, London Stock Exchange Group

Indications are that this could stimulate increased retail size issuance of corporate bonds. This has certainly been the experience in Italy, which has a long tradition of retail participation in bonds. Furthermore, a recent trend on the Borsa Italiana MOT market has seen large UK financial institutions issue retail-targeted bonds and use the electronic bond market as an efficient mechanism for distribution to retail investors.

In a similar way, the UK electronic order book provides exciting new opportunities for corporate issuers wishing to offer retail bonds to UK investors in a cost-effective and efficient way. A UK company, for example, could issue a bond tradable in units of £1,000, or even £100 and private investors would be able to buy this bond in the electronic market as continuous two-way tradable prices would be provided by a dedicated market maker.