BlocSec, a non-displayed block-trading platform for Asian equities, has reduced its minimum order size to US$250,000 from US$1 million in response to falling block sizes in the region.
The price volatility that has shaken global stock markets since the collapse of US investment bank Lehman Brothers last September has resulted in a greater reluctance to trade large blocks. Traders have become wary of executing complete blocks in one go in case a news event later in the day affects the price. Therefore, many firms are splitting up blocks into smaller orders to trade over the course of the day.
BlocSec’s decision to reduce its minimum order size follows the introduction of a 20% average daily volume (ADV) feature by the platform in December last year. This allowed traders to submit orders that were below the US$1 million threshold as long as they exceeded 20% of the relevant stock’s ADV based on a 30-day moving average. BlocSec made this change to facilitate trading of small- and mid-cap stocks on its platform.
BlocSec, owned by pan-Asian broker CLSA Asia-Pacific Markets, launched in Japan and Singapore in May 2008 and expanded into Hong Kong in August 2008.