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The electronic trading platform used by PANAFEX™ enables the fully automated execution and settlement of all Exchange transactions.
Electronic trading begins with the investor: investment advisors at participant banks and
brokerage houses compile orders in their own in-house systems. That data is then forwarded
to the institution's trading desk, where the orders are examined and routed directly into the
PANAFEX™ Trading System. From there, they reach the central Exchange System of PANAFEX™,
which automatically confirms receipt of the order, gives it a time stamp and verifies its formal
correctness. In the fully automated Exchange System of PANAFEX™, buy and sell orders are matched
against each other in accordance to clearly defined rules.
Regardless of their origin or size, orders are prioritized for execution firstly on the basis of
price and secondly on the basis of time of receipt (price-time priority).
Principles of Exchange trading
Trading on PANAFEX™ is based on the following principles:
Central, order-driven marketplace
Market transparency
Market liquidity
Equal treatment of all participants
Centralized and order-driven market
PANAFEX™ is a central exchange for the trading of derivatives and is renowned for its fully
electronic trading platform.
A further element in this automated derivatives exchange is the principle of an order-driven
market. Orders are entered into the trading systems of the various participants and automatically
routed to the Exchange System. Execution of the orders takes place in keeping with the principle
of price-time priority.
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Taking a buy order as an example, the orders with the highest price will
be processed first and afterwards, in the event of price parity, according to the time of their
arrival.
Market transparency
PANAFEX™ fulfils investors' need for transparency in trading with the publication of market
related information. A wide array of data is disseminated to outside providers of financial
information (data vendors), including:
last-paid price of an instrument traded on-Exchange, together with the volume and time of execution
best bid and ask prices, including size
cumulative on-order book and off-order book daily volume
status of the order book
Exchange trading periods
any interventions the Exchange has made
Equal treatment of participants
The principle of equal treatment obligates the PANAFEX™ to ensure that no participant is
systematically advantaged or disadvantaged in terms of order entry or the dissemination of
information. All participants have equal access to the market. Participants' order entries
are processed in the sequence in which they were received in the Exchange System.
Market liquidity
To ensure the highest possible degree of trading liquidity, participants are subject to a
relative duty to trade on the Exchange. In other words, during official trading hours, all
buy and sell orders that do not exceed the mandatory Exchange limit must be executed via
the Exchange System ("duty to trade on the Exchange")
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