An intra-day auction has been established for shares listed on Oslo Axess and those in the OB Standard liquidity category listed on Oslo Børs.
As of 16 June normal trading will cease between 13:30 and 13:35 to allow for the new auction, set up to expedite party matching over individual share orders as well as facilitate larger order crossings.
A concentration of liquidity is expected to be achieved, significantly enhancing turnover and augmenting the 20% of daily trading which already occurs during the existing 09:00 and 16:20 auctions.
The establishment of the new auction reflects previous efforts by Oslo Børs to increase liquidity, as in 2012 when the exchange reduced its trading hours in order to attract higher quality liquidity. At the time Oslo Børs acknowledged the significantly higher trade volumes exhibited during the beginning and end of day auctions as the basis of its decision to reduce trading hours, leading to the introduction of the intra-day auction.
Notably, the London Stock Exchange (LSE) recently considered a similar move after consultation with key market participants, confirming Oslo Børs’ expectations. Auction trading size on the LSE reaches an average of £30,000 compared to only £6,000 experienced throughout continuous day trading.
However, while the impetus is far clearer for Oslo Børs, which cited increased competition in 2012 as a key factor behind their consideration of trading hour alternatives, whether or not the LSE will adopt the same strategy remains to be seen.
If the decision to introduce an intra-day auction is taken in London as well, then the new daily auction would occur at 14:00, including a call period of three minutes with a randomised end of up to 30 seconds (as per current auctions) and would apply to all SETS equity securities.
Apprehension remains however, with regards to both the technological adaptation that would be required and the potential reduction in continuous day trading that market participants fear might occur as a result. However, as Brian Schwieger, head of equities at the LSE, has pointed out, while “realising there is going to be some work involved,” sell-side participants, remain enthusiastic and pragmatic. The result of the LSE’s consultation is expected in July.