A highly volatile trading environment usually leads to market participants opting for certainty of execution as opposed to seeking price improvements – a traditional dilemma. In his latest article published in the magazine "Best Execution", Christian Reuss, Head Cash Markets and Member of the Management Committee, Securities & Exchanges at SIX, explains how the Swiss Stock Exchange breaks with that long-standing trade-off: "Thanks to the unique sweep functionality, our non-displayed liquidity pool SwissAtMid allows users to achieve both – certainty of execution and price improvements – at the same time."
In the second half of March, when markets were most volatile, turnover in SwissAtMid exceeded CHF 1 billion in 11 out of the 15 trading days and yielded price improvements of more than CHF 8 million for market participants. In March 2020, the Swiss Stock Exchange saw several new records being established. Trading turnover was up +80.9% on the previous month and reached CHF 293.0 billion, while the number of transactions increased by +127.7% to 17'399'685 – both new all-time monthly highs, surpassing the previous ones, established in January 2015 and February 2020, by 61.3% and 127.7% respectively.
Fair and orderly trading to support the markets
The article also looks at how spreads developed during the month of March 2020. While they did widen across all markets, the relative spread changes on the Swiss Stock Exchange were at the lower end of the spectrum when compared to its European stock exchange peers. Christian Reuss explains this positive outcome: "Our committed liquidity providers delivered during such difficult periods. So despite the high levels of uncertainty, trading remained fair and orderly."
The Swiss Stock Exchange favors open markets so that investors can adapt to changing economic views in a timely manner – including mechanisms such as short-selling. Because of their potentially negative impact on real-time price formation, Christian Reuss is against a general ban on short selling: "Price formation should not be interfered with to allow unbiased valuations to be reflected in them. However, we prohibit so called ‘naked short-selling’ – in the sense of selling with no ability to settle the contract if the seller is neither in possession of the security nor able to borrow it – on our market."
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