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Private Investors Newsletter
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Order book for Retail Bonds (ORB) - One Year Anniversary

On 1 February 2011, The London Stock Exchange marked the first anniversary of the launch of its Order book for Retail Bonds (ORB). Since February 2010 the ORB, designed specifically for private investors, has seen significant growth in both the number and range of bonds available for trading, as well as an increase in the number of participants offering investors access to the platform.  There are now 49 gilts, 92 corporate bonds and three supranational bonds available on the ORB, all being supported by dedicated market makers quoting transparent, continuous two-way tradeable prices throughout the trading day.  
On 25 February 2011, the London Stock Exchange held an event at its Paternoster Square headquarters to mark the occasion with Exchange executives, issuers, market makers and industry experts discussing the development of the platform over its first year and prospects for its evolution going forward.  The keynote speaker was Lord Green of Hurstpierpoint, Minister of State for Trade Investment, who highlighted the importance of the ORB market.  Lead market maker Evolution Securities also spoke about the key benefits of the ORB market model in offering greater transparency and price competition for private investors.  RBS, which has issued six new bonds on the ORB market this past year, also gave their outlook for the future development of the UK retail bond market.  The event finished with a lively and informative panel discussion amongst a range of expert speakers and chaired by Jonathan Eley, Editor of the Investors’ Chronicle.  The event provided a forum to discuss the important developments of the UK retail bond market and the issues facing investors.  Key themes to emerge from the discussion were the need for wider private investor education on bonds, the importance of expanding the market to cover a wider range of online brokers and the need for greater clarity in product definitions to distinguish between the bonds traded on ORB, where investors can trade in and out of their positions, as compared to other fixed-rate deposit products which are often described as ‘savings bonds’. 
The celebration of ORB’s one year anniversary also coincided with the listing of the new Tesco Bank bond on ORB.  This bond is tradable in denominations of £100 and offers an annual coupon of 5.2%.  Prior to the formal listing, this was the first bond on ORB to made available for ‘when issued’ dealing, which allowed investors to enter into conditional trades with deferred settlement for four days before the official listing.  Continuous two-way tradeable prices are now available in the Tesco Bank bond and can be seen here

Further information on the ORB one year anniversary is available here

Looking back at the first year of the Order book for Retail Bonds  
Below is a timeline of significant events and key developments for ORB in its first year:  

February 2010

  • ORB was launched, offering continuous two-way trading in 24 corporate bonds and 49 Gilts. Royal Bank of Scotland issued the first bond launched specifically for the new platform, tradable in denominations of £100.
March 2010  
  • A series of seminars around the country were hosted, promoting the platform to local firms, advisors and potential new issuers.
  • A new batch of 9 existing bonds and Gilts became available on ORB - corporate issuers included Marks & Spencer, Unilever, Safeway, Kingfisher, National Grid, Compass Group and Imperial Tobacco Finance.
April 2010   
  • Another batch of 5 bonds and Gilts became available - corporate issuers included Vodafone and Allied Domecq.
  • Provident Financial issued a new 10 year bond specifically for trading on the new market, tradable in denominations of £1. This was the second issuer after RBS to issue a bond specifically for the platform.
  • Numis Securities and Collins Stewart signed up as new market makers for the platform.
June 2010  
  • Lloyds TSB issued a bond specifically aimed at the market, tradable in denominations of £100, and raising £75m against a target of £50m.

July 2010

 
  • Jefferies, a Gilt Edge Market Maker (GEMM), began providing liquidity to the platform
September 2010  
  • 65 additional corporate bonds became available for trading on the platform. Corporate issuers included HSBC, FirstGroup, Rolls Royce and Daily Mail & General Trust.
October 2010
  • ORB went on tour with the Investors Chronicle Roadshow 2010, highlighting the benefits of the new platform to private investors at a series of events around the UK.
November 2010  
  • RBS launched two new corporate bonds specifically for trading on the new platform. They were the platform’s first inflation-linked and floating rate bonds, tradable in £100 denominations, and raised a total of £50m.
December 2010  
  • RBS launched an “Inflation-Multiplier” bond specifically for trading on ORB, allowing investors to benefit from rising inflation. It is tradable in denominations of £100.
January 2011
  • RBS launched a new “Step-Up” bond.
February 2011
  • Tesco Bank became the fourth new issuer to list a new bond on ORB, launching a fixed rate bond on the market.

   

Fixed Income Team, London Stock Exchange



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Welcome - April 2011 
Welcome to the first edition of Private Investors Newsletter, the London Stock Exchange’s free online newsletter, covering news and analysis on financial products, capital markets and investment trends in the UK.

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