Market Structure Part-I
Exchange information like ID markets, odd lot markets, short selling rules, settlement cycle, price limits, crossing rules, NDF markets etc fall into market structure.
In Asia different markets have different rules for each market structure component. The market structure information is available on each market’s exchange website, with increasing regulations the market structure information is becoming more valuable day by day. Large brokers these days have a separate teams to teach their clients about the best practices and keep them aware of the latest market structure changes.
We list down some basic market structure components important wrt trading in Asian markets.
Settlement Cycles- Settlement date is the date on which on which transfer of shares is completed. If a trade transacts on a date ‘T’ then following is a list of the settlement date for major asian markets-
South Korea: T+2
CH Connect: T+0
Thailand: T+3(exchange trade), T+2(OTC trade)
India: T+2 but practically its like T+3 as shares dont settle till late T+2 so the custodian is not able to confirm all trades are settled. By the time you get the confirmation its near market close.
Crossing Mechanism- Cross trade occurs when a broker executes a buy and a sell order on the same security for two different clients or between two brokers. Different exchanges have different regulations on crossing mechanism.
South Korea: Crossing possible via block trade (min 500 shares or 100 million KRW notional)
Taiwan: Subject to minimum crossing size
1) For a single security: at least 500 trading units, or more than NT$15 million
2) For a basket of stocks: at least 5 types of stocks and more than NT$15 million
China: Crossing not allowed
HongKong: No minimum crossing size. Can cross during the market hours, pre market hours and post market hours. The trade needs to be reported to the exchange within 15 minutes of the trade.
Philippines: No minimum crossing size
Singapore: Minimum crossing size applicable, for smaller trades need to do on OTC
Malaysia: Post market can cross for a period of time, after that the trade will have to be the following day.
Indonesia- No minimum crossing size, can cross within 3 days.
Thailand: Can cross after market for a period of time. The trade goes as an OTC trade.
India: There is a block trade window between 9:15 am to 9:50am (IST) but all trades in this window are reported, during the remaining of the regular trading session you have to send buy and sell orders simultaneously to the market for them to cross. Normally you take a look on the market book for the security and take a call.