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The exchanges in Tallinn, Riga and Vilnius are about to change the Baltic Market setup, so to enable a more efficient, transparent and stronger trading environment. Seeking for greater degree of harmonization of the Baltic Market practices with the Nordic and other benchmark market practices, stock exchanges have decided to implement the following changes: to review and harmonize the trade types on the Baltic Market, to introduce a Pre-trade anonymity, new block trade criteria and deferred publication option for members.
The changes are made due to OMX Nordic Exchange’s Baltic Market’s assessment to develop the market as such. Moreover, some of these improvements are put in line with the requirements of the Markets in Financial Instruments Directive (MiFID), which will enter into force on November 1, 2007.
"As a result of these enhancements, we believe that the Baltic market will become more transparent and attractive to local and foreign investors and more harmonized with the EU wide practices. We are very satisfied that preliminary consultations with market participants have shown broad support to the planned changes," said Johan Rudén, President of the Baltic Market business unit at OMX.
More information about oncoming improvements
As of November 1st the list of trade types on the all three exchanges will be harmonized by reducing the number of currently existing different trade types to make the market more transparent and understandable for local and foreign investors without decreasing the functionality.
The launched Pre-trade anonymity by removing member ID from inserted and not executed orders in order books will lead to more efficient market and higher liquidity as formation of price will be based on price and quantity factors, rather than indirect speculative factors. Pre-trade anonymity will also help to prevent front-running and will encourage members to show their interest in order books.
Currently in Baltic stock exchanges the minimum size of transaction that is qualified as a Block trade is set by the decision of the board of the stock exchange and accordingly published on the website. As of November 1st minimum size of transaction to be qualified as a block trade would be set according to the uniform criteria valid in all MiFID compliant markets, thus making the cross-border trading easier.Introduced deferred publication is an option for market operators to request local supervisory institutions to allow deferring the publication of their large transactions. Deferred publication is already functioning in similar manner in other EU regulated markets and benefits are well appreciated. Deferred publication means that an order qualifying for deferred publication will be published in the market to other market participants after definite time period after entering the transaction in the trading system. By deferring the publication of particular orders, other market participants cannot abuse the situation where the investment firm has a large but not yet covered position. Depending on the size of the order and average daily turnover of the share, the order publication might be deferred up to three days.
