A share represents an ownership or equity interest in a company. Shares offer their owner the following rights:
Continuous trading offers many opportunities to buy and sell a share in the course of a trading day and allows real-time knowledge of a share's market status by establishing several prices. It offers the opportunity to quickly execute buy or sell orders and to increase the stock market's liquidity. Unlike fixing which fixes the equilibrium price only once a day, continuous trading makes it possible to know in real time the market status of an instrument by fixing several prices during the trading day, thereby offering many opportunities to buy and sell securities.
Organisation of a continuous trading session
Continuous trading comprises 4 phases (pre-opening, continuous trading, pre-closing and trading at the last price), the sequences of which are as follows (in local time, GMT):
9am-9:45am: Pre-opening phase; Taking of orders
During the pre-opening phase, orders entered by licensed stockbrokers (SGI – Société de Gestion et d’Intermédiation) in the regional stock exchange's trading system are registered in the central order book without giving rise to transactions.The central order book, the theoretical-opening price and the volumes likely to be traded at this price are updated each time an order is entered into the system and circulated in real time.
9:45am: Opening auction
When trading opens, the trading system, for each share, compares sell and buy orders in order to match them. Through this auction, it then establishes the opening trading price. At the start of this price determination phase, the central order book is temporarily frozen while the matching algorithm does the matching. At this point, it is no longer possible to enter orders can no longer be entered in the trading system and orders that have already been entered can neither be modified nor cancelled.
If the matching takes place within the authorised dynamic reservation thresholds, an opening price is established and circulated to the marketplace. However, if the matching is outside of the dynamic reservation threshold, the share concerned is reserved for a period, the duration of which is set by Instruction of the regional stock exchange. An opening price is determined after the reservation period if the conditions are fulfilled. The opening price is the last theoretical price before matching. In the absence of the opening auction price, the opening price is the benchmark price. Orders are executed in the central order book in accordance with the priority of execution principle set out by instruction of the regional stock exchange.
9:45am-2pm: Continuous trading
After the opening auction, the continuous trading phase starts and goes on until pre-closing. All orders that have not been executed or orders outstanding after the opening auction are transferred to the continuous trading phase. During this phase, it is possible to register, modify or cancel orders. Each new order registered is immediately matched to available orders in the opposite direction in the central order book so as to check whether or not it can be executed. Orders already in the central order book determine the execution price. Transactions take place as and when counterparties allow. Orders are executed in the central order book in accordance with the priority of execution principle set out by Instruction of the regional stock exchange.
The pre-closing phase comes after the continuous trading phase. Orders are automatically registered in the Central Order book without giving rise to transactions. The Central Order Book, the theoretical closing price and the volumes likely to be traded at this price are updated each time an order is entered into the system and circulated in real time.
2:30pm: Closing auction
The closing auction process is identical to the one described for opening auction. The closing price is the price deriving from the closing auction. If no price can be established through the closing auction, the closing price is the price of the last transaction carried out during the continuous trading phase. The closing price is the price of the opening auction or the benchmark price in the absence of transactions during the continuous trading phase. Orders in the central order book are executed in accordance with the priority of execution principle set out by Instruction of the regional stock exchange.
2:30pm–3pm: Trading at the last price
The phase of trading at the last price comes after the closing auction. During this phase, it is possible to only orders in exchange for existing orders for the residual quantity can be entered orders in exchange for existing orders for the residual quantity. Orders are executed only at the closing price.
3pm-3:15pm: Market supervision
3:15pm: Closing of the market
After trading at the last price, the regional stock exchange closes the market and adjusts it, notably in case of cancellation of transactions. Brokerage firms can no longer enter, modify or cancel orders. After the adjustment, trading becomes official. No modification can be made.
Execution priorities after the order accumulation phase
After the order accumulation phase, orders are executed according to the following priority principles:
Within each priority, orders are executed according to their origin then to their time-stamp.
Execution priorities during trading and trading at the last price
Execution of orders during continuous trading and at the last price is done by applying the following priority principles:
Every order must indicate whether it is a client or non-client order. A client order is placed for the account of a securities brokerage firm client, be it a natural or legal person. The non-client order is an order given by a securities brokerage firm on its own behalf, on behalf of one of its staff members or another securities brokerage firm, or a member of staff of the Regional Stock Exchange, the Central Depository /Settlement Bank or Regional Council.
At the same stock market price, client orders have priority over non-client orders.
An order is time-stamped when it is accepted in the order book. It thus receives a stamp stating the date, time of entry, as well as the order number. The operation and the stamp resulting from it are called "Time stamping".
Time stamping priority is determined by the age of the time stamping. An order which time stamp pre-dates that of another order has time stamping priority over the latter order.