February 20, 2024

Periodic Market Benefits

Our secondary market offering consists of two markets; the continuous and the periodic. 

Here we focus on the benefits of the periodic market variant.

Syndex’s decentralised periodic secondary market is based on a call auction trading algorithm that matches buyers and sellers at a single, predetermined point in time. 

Disclosure – issuers are obliged to disclose all material and regular information pre-auction to ensure information symmetry. This variant has a significantly lower burden of disclosure when compared to the continuous market variant.

Price Discovery - call auctions are excellent for price discovery. By allowing all orders to be collected and executed at a single price, they provide a clear and transparent reference point for an asset’s value.

Reduced Market Impact - in continuous trading, large orders can move the market significantly, causing potentially unfavourable execution prices. Call auctions reduce market impact because all orders are executed simultaneously at a single price, minimising the impact on the securities price.

Enhanced Transparency - call auctions offer a high level of transparency as all participants can see the order book and the evolution of the equilibrium price. This transparency can increase trust in the market and attract more participants.

Fairness - the simultaneous execution of orders in a call auction ensures that all participants receive the same execution price, which can be seen as fairer than continuous trading, where prices may vary significantly on a trade-by-trade basis.

Liquidity Provision - call auctions are attractive to investors who are more willing to participate in a well-structured auction, leading to deeper order books and tighter spreads.

Improved Efficiency - call auctions are a more efficient way to match buyers and sellers since they concentrate trading activity at a specific time, reducing the risk of extended periods without trades.

Ross Verry

Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.

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