Sri Lanka SEC approves All or None blocks in trading of stocks

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Mar 06, 2017 (LBO) – Sri Lanka’s securities regulator has approved the Automated Trading System rules and corresponding amendments to the Central Depository Systems rules developed by the CSE to facilitate trading of All or None (AON) blocks.

AON is an instruction used on a buy or sell order that instructs the broker to fill the order completely or not at all. If there are not enough shares available to fill the order completely, the order is canceled when the market closes.

An AON order is considered a duration order because the investor provides instructions to the trader about how the order must be filled, which impacts how long the order remains active.

The SEC said in a statement that the ATS is designed to match buy and sell orders placed by stock broker firms of the CSE.

Accordingly, several mechanisms can be used to transact securities including the Normal Order Book, Crossings and the AON facility.

The AON order facility is designed to facilitate the sale or purchase of a large quantity of securities. The minimum number of securities required for an AON Block shall be at least 10 percent of the number of securities issued.

“In the wake of the Government’s programme to restructure SOEs, the AON can be a medium through which strategic stakes in Government owned entities can be transacted in a transparent manner in a competitive environment,” the SEC said.

“The AON method will assist in the disposal of such assets at the optimum price.”

The SEC said the AON method has many advantages over using the Normal Order Book and Crossings mechanism.

“Transactions using the AON method will be open for bidding for 3 market days whereas there is no such requirement either in the Normal Order Book or the Crossings mechanism,”

“Further, transactions using the AON method will have a lower systemic risk since clearing and settlement of transactions will take place on a defacto delivery vs payment basis.”

Another facility provided in the AON method is the facility for a consortium of buyers to bid for the parcel collectively which will help improve liquidity.