In on-site trading, both parties engage in trading through the trading system of the stock exchange. The trading price and quantity are determined by the market supply and demand relationship, and the trading process is transparent, open, and standardized.
Many investors have seen the term 'on the exchange trading' during their investment process, but many investors do not fully understand what it means. Today, we will explain it to everyone.
What is floor trading?
On-exchange trading, also known as exchange trading, refers to the trading method in which all supply and demand parties gather on the exchange for competitive trading.
This trading method has the characteristics of the exchange collecting margin from trading participants, being responsible for clearing, and assuming performance guarantee responsibilities.
On the exchange, trading also refers to the normal trading hours during which the trading volume is relatively high and the trading is active.
On the market, traders are generally designated by the brokerage company on the exchange's seat, responsible for submitting purchase and sale orders, etc. throughout the company, which is commonly known as a vest.
On-exchange trading has the following characteristics:
1. Standardized and transparent trading process: On the exchange, trading is conducted within the stock exchange, and the trading process is regulated by the stock exchange. The trading process is standardized and transparent, and trading information is publicly available. Investors can query trading information through the trading system of the stock exchange.
2. Disclosure of trading prices: The trading prices of exchange transactions are determined by the market supply and demand relationship, and the trading prices are open and transparent. Investors can trade according to market conditions, avoiding information asymmetry.
3. Relatively low transaction costs: The transaction costs of on-exchange transactions are relatively low, including transaction commissions, stamp duties, etc. Compared to off-exchange transactions, the transaction costs are more transparent and standardized.
4. High trading efficiency: The trading efficiency of on-the-exchange trading is high, and the trading system automatically matches the orders of both buyers and sellers. The trading speed is fast, the trading process is simple, and investors can quickly complete the transaction.
5. Relatively low trading risk: The trading risk of on-the-exchange trading is relatively small, the trading information of both parties is open and transparent, the trading process is standardized, and the trading risk is controllable.
6. Diversification of trading varieties: The trading varieties of OTC trading include stocks, bonds, funds, etc. Investors can choose different trading varieties according to their own needs.
7. Large trading volume and long trading time: The trading volume and trading time on the exchange are large, and investors can trade during the opening hours of the stock exchange to meet the needs of different investors.
Overall, on-the-exchange trading has the advantages of standardized trading processes, transparency, high trading efficiency, and relatively low trading risks, making it one of the most important trading methods in the securities market.