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News - Driving the Transformation of Trading



23.07.2020 Participants

Driving the Transformation of Trading

The Swiss Stock Exchange has successfully enhanced and broadened its offering in two trading segments: Equities and Structured Products.

In its latest platform release, the Swiss Stock Exchange features new matching functions specifically designed to benefit the investor community. The latest maintenance release for the SWXess trading platform, has introduced a number of functions for trading interfaces, in addition to changes across its market data interfaces, that offer significant benefits for market participants. By providing clients with additional sources of liquidity and functionality it is paving the way for additional volumes to be executed over the exchange while reducing risks for market participants.

Price Validation Market Model (PVM)

According to André Buck, Global Head Sales, products and services at the Swiss Stock Exchange, this new release brings about a new price validation market model for structured products, a move he believes is especially valuable. Under the Price Validation Market Model – which is a variation of the standard Quote Driven Market Model – orders and quotes are not immediately executed but trading is interrupted briefly enabling market makers, liquidity providers and clients to validate their order or quote price.

During the price validation interruption, there is no pre-trade transparency in the impacted order book. Following on from the price validation interruption, orders and quotes are matched according to the auction or the principle of highest executable volume.

This shift away from binding prices will help increase the quantity and quality of the Swiss Stock Exchange’s tradable portfolio. Buck emphasises this will be advantageous for the market as retail investors will gain greater access to a wider variety of products and superior pricing made possible by the lower spreads.

Trading at Last (TAL)

Simultaneously, the Swiss Stock Exchange has also rolled out its Trading at Last (TAL) solution for equity trading. TAL is an extension of on book trading in the Central Limit Order Book after the closing auction (which occurs at 17:30) until 17:40. It enables a continuous trading session immediately following the closing auction, where orders can be executed at the official closing auction price. This provides participants with the opportunity to find additional liquidity at the end of the trading day without signalling any unexecuted positions to the market.

Play It Safe

Such structural improvements are expected to play an integral role in helping to attract more trading over the Exchange – or OTE for short. According to Buck, although some products are better suited to be transacted on an OTC (Over The Counter) basis, the Swiss Stock Exchange is making every effort to encourage greater OTE trading. In contrast to the OTC market where pricing information is not always readily available, a stock exchange is able to better facilitate liquidity, provide transparency and maintain the current market price.

As a result of these upgrades, Buck anticipates that the number of products and the volume of trading on the Swiss Stock Exchange will grow. Furthermore, he reminds us that the preparation and introduction of this new release took place under difficult global circumstances, for both the teams at the Swiss Stock Exchange and its clients, and is grateful to all of them for successfully taking up this challenge.

Where Quality Comes as Standard

At the Swiss Stock Exchange, quality comes as standard. This applies to the performance and stability of our trading infrastructure, the liquidity, prices and spreads in our order books and our services in the listing, trading and post-trading space. As the clear reference market for all SMI shares, the Swiss Stock Exchange provides the highest liquidity, the best prices and the tightest spreads. We continuously strive to expand and improve our range of services and products, as well as our SWXess trading platform.

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