At 11-under-par, the 21-year-old Ladies European Tour rookie was two strokes clear of compatriot Charley Hull, with first round leader Sophie Giquel-Bettan of France a stroke further back on eight under.
Peters' round of 63 matched the score previously recorded by Ashleigh Simon and Caroline Masson in the first round of the 2013 tournament. She birdied the second and third holes before posting seven birdies on the back nine to come home 29 strokes, equalling the all-time record on the Ladies European Tour.
"I just played absolutely amazing. I hit my irons so close and putted really well. I had a few other chances as well, but a 63, I'm really happy with the way I played today," said Peters, who recently shot an 11-under-par 61 in a charity day at her home course, Shifnal Golf Club, in Shropshire.
"Seven birdies could have been eight. I left one right in the jaws on the 12th, the par 3, but I just putted really well, hit it close and gave myself chances."
Since turning professional in October 2014, Peters has quickly settled in to life on tour. She has made the cut in all three events played so far and is ranked 86th on the current order of merit. This is her first time leading an LET event and she now sits two strokes clear of Charley Hull, who bogeyed her last hole, the par-four ninth, after driving into the trees.
Hull said: "I feel like I was hitting it well out there today. It was a shame about my last drive but I just saw the other girls and the wind brought their drives to the right. I thought if I try and hit a hard draw down there, but it stayed on my line and so I was a bit annoyed. Apart from that I feel like I'm playing solid and I hit a great drive into the eighth hole, but I just missed that putt, because I came up on it. Apart from that I'm pleased with the way I'm hitting it and where I am going into the weekend."
Giquel-Bettan completed her round in breezier conditions in the afternoon and was pleased to be in third position, a stroke ahead of Thailand's Nontaya Srisawang, Germany's Caroline Masson and Danish rookie Emily Kristine Pedersen, who graduated from high school last Wednesday.