As part of our brand and service at Easy, we show clients a 15-minute delayed price on the platform during the day. This is because individuals viewing live prices would be charged a fee by the stock exchange (upward of R68 excl VAT). Luckily for us, stock exchanges allow investors to view share prices for free on the condition that the prices are delayed by 15 minutes. That’s why most free to view share price platforms have a 15-minute delay (from Google’s Stock View to Bloomberg, you will notice this delay). Check out the FAQ on this topic here.
ETF Market Makers:
Did you know that Exchange Traded Funds on the platform use a ‘market maker’, also known as a liquidity provider? Market Makers are there to ensure that there is sufficient liquidity often at an acceptable and predetermined bid/offer spread. Market Makers are typically banks or other financial institutions.
Whilst our equity market opens and closes through an auction, the exchange also makes provision for intraday volatility auctions, which are triggered if a stock moves by more than a certain percentage within the trading session.
How come then do we sometimes experience unusually wide spreads on ETF’s if that’s the purpose of market makers?
- They rely on the underlying constituents that make up the ETF, to price it accurately. If any of the constituents are in a volatility auction there is no way to accurately price the ETF, and hence remove their prices until normal trading of the constituents resumes. Given current volatility, there are approximately 700 volatility auctions triggered every day!
- Many ETF’s reference foreign listed funds or assets, most notably those listed on the London Stock Exchange. Outside of daylight savings, these international instruments start trading later than we do, hence the market makers don’t have reference prices to price our local instruments until the London Stock Exchange opens. In the UK daylight savings starts on 29 March and this means that the UK market will open at the same time as we do, so we should see increased liquidity from earlier in our trading session.