SEAQ is the London Stock Exchange's non-electronically executable quotation service for specified fixed-interest securities. Learn its quotes, history, and risks.
SEAQ is the London Stock Exchange’s non-electronically executable quotation service through which registered market makers display prices in specified fixed-interest securities. The service disseminates market-maker quotations, but it does not automatically match and execute orders like the LSE’s SETS electronic order book.
The name has a broader historical association with UK equity market making. Modern readers should separate that history from the current instrument list and trading-service rules published by the LSE.
SEAQ supports quote dissemination for eligible securities allocated to the service. In simplified form:
flowchart LR
A["Eligible fixed-interest security"] --> B["Registered market makers post quotes"]
B --> C["Quotes are distributed to participants"]
C --> D["Broker or participant seeks execution"]
D --> E["Trade terms are confirmed outside automatic matching"]
E --> F["Execution is reported and settled under applicable rules"]
The important distinction is between quotation and execution. SEAQ can display firm market-making interest under the applicable market model, but the quotation service is not itself a continuous matching engine. The exact route from quote to completed trade depends on participant access, communication, venue rules, and the instrument.
Assume a fixed-interest security is quoted on a clean-price basis per 100 of nominal value:
| Quote side | Price | Market-maker meaning |
|---|---|---|
| Bid | 99.10 | Prepared to buy under the quote’s terms |
| Offer | 99.70 | Prepared to sell under the quote’s terms |
The displayed spread is:
For 50,000 of nominal value, the simplified clean-price amounts are:
These calculations illustrate quote direction; they are not a settlement statement. Depending on the security and trade, accrued interest, denomination, minimum size, currency, commissions, taxes, settlement date, and negotiated execution can change the cash amount.
| Evidence | What it establishes | What it does not establish |
|---|---|---|
| SEAQ quote display | Market-maker bid or offer visible at a recorded time | That a particular investor received the displayed price |
| Security list | Instrument allocation to the service at the list date | Permanent eligibility or current liquidity |
| Broker message or call record | Communication and requested trade details | Final execution unless acceptance is confirmed |
| Execution report or confirmation | Price, quantity, side, time, and completed status | Future liquidity at the same price |
| Settlement record | Cash and security movement under settlement terms | Whether the pre-trade quote was competitive |
For execution review, retain the quote snapshot, request details, competing prices, dealer response, execution report, trade report, and settlement evidence. A delayed public display is weaker evidence than a timestamped participant record.
SEAQ was introduced during the London market’s 1986 “Big Bang” reforms as a screen-based quotation system through which registered market makers published two-way equity quotes. It was a major change from the earlier floor-based structure, but execution could occur by telephone or participants’ own systems rather than automatic order matching.
The LSE introduced SETS for FTSE 100 securities in 1997 and later extended electronic order-book trading to other liquid equities. SETSqx was introduced in 2007 for less-liquid equity securities, combining scheduled electronic auctions with market-maker quotations where applicable. The LSE’s current SEAQ page now identifies the service with specified fixed-interest securities.
This history creates two common but opposite errors:
| Service | Core model | Current role in simplified terms | Execution implication |
|---|---|---|---|
| SEAQ | Quote-driven quotation service | Specified fixed-interest securities | Quotes are not electronically executable through SEAQ itself |
| SETS | Continuous electronic order book with auctions and supported order types | Liquid equities, ETFs, ETPs, and other eligible securities | Compatible orders execute through the book under venue rules |
| SETSqx | Hybrid periodic auctions, with market-maker quotes for some securities | Less-liquid and other supported equity or equity-like securities | Execution can occur in scheduled auctions; the model varies by instrument |
Instrument allocation matters more than the acronym alone. The LSE publishes security lists and business parameters that should be checked for the relevant date.
Many debt securities trade less frequently than large equities. Market-maker quotations can provide price discovery and potential liquidity when natural buy and sell orders do not meet in a continuous public book.
A quote can inform a valuation, but its reliability depends on recency, firmness, size, market conditions, and whether both sides are active. An old or small quote may be a weak mark for a large holding.
The bid-offer spread is one visible cost. Investors should also consider dealer markup, accrued interest, brokerage, taxes, settlement, market impact, and the prices available for the full quantity.
The strongest review compares accessible prices and sizes at the decision time, records why a dealer or route was selected, and ties the conclusion to the execution report. A service label alone does not prove best execution.
This article is educational and does not provide trading, execution, valuation, legal, regulatory, or investment advice.