The auctions will use computer algorithms to match as many buyers and sellers of stocks at a specific time in the same way opening and closing prices are determined at the exchange. They will be held from noon to 12:05 p.m. and 2 p.m. to 2:05 p.m. for 38 companies.
The auctions, intended to narrow spreads by bringing buyers and sellers together at a specific time, are part of several reforms ASX has made to its trading platform since Chi-X Australia Pty became its first competitor in 2011. Traditional exchanges worldwide are losing market share to so-called dark pools and other alternative trading venues.
“Instead of having liquidity spread over the full day with very sparse trading and sometimes missed opportunities, investors can now look to specific points in time with hopefully greater trading activity,” Ofir Gefen, head of Asia Pacific electronic brokerage and analytics at New York-based broker Investment Technology Group Inc., said in an e-mail Jan. 28. “That would lead to lower spreads and better price discovery for these sparsely traded stocks,’
If the three-month trial is successful, ASX will consider expanding the program to all companies not included in the S&P/ASX 300 Index. (AS52) The London Stock Exchange already holds intra-day auctions for less-traded stocks, hosting four a day.
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