AX introduces scheduled auctions
US buy-side traders can now schedule their own stock auctions and
invite other members in advance, using new functionality devised by trading
venue operator AX Trading.
The AX Trading Network has launched a trader-initiated call
auction system that allows traders to determine what information to share about
their auction – if any – as well as whom to invite. The intention of the
platform, launched in November 2011, is to help traders reduce information leakage in an open small-cap trading
environment, according to AX CEO Kevin Callahan.
AX scheduled auctions can only be triggered by an order with a
minimum of 25,000 shares, routed to the AX market. As with on demand auctions,
the initiator of the scheduled auction can determine whether to run a blind or
disclosed auction and what types of counterparties to invite.
Invitations to trade are sent out notifying members that the
auction has been scheduled and indicating the time of the auction. Once opened,
the auction sits on the AX system for five minutes. Participants receive a
message indicated that there is interest in a particular stock, but not whether
the initiator is a buyer or seller. Recipients may send in an order of at least
10,000 shares. At the end of the five minutes, either the trades are matched or the auction expires.
scheduled auction adds a new dimension to the AX trading process,” said Callahan.
“The scheduled auction is clearly not for every trade. But for especially large
or especially illiquid trades, our members were looking for us to provide a way
to create a more unique liquidity event so that they could give participants
more advanced notice of the auction in order to consider their level of
interest and participation.”