Delay in trade execution on news

[edmunsta]

*edit* Can an admin please move this to beginners forum asap... **** I'm an observant one aren't I...

Gday all

So i've been following the ASX company announcements closely lately, trying to scalp them - just on paper at this point. I get announcements through the asx website and track the prices through comsec. Problem is, i've noticed a phenomenon which I don't understand...

The market depth, as i understand, is a list of all the standing buy and sell orders and their respective prices and quantities right? So if you issue a market order it should instantly (or close to) execute at the relevant bid/offer?

Perhaps it's easier if I just explain what I've seen. Immediately after a piece of good news, on a fair few stocks i've noticed that for a few minutes the bid exceeds the offer. Now I know this is totally normal when stock is in pre-open or suspended... but this is just in normal trading. Basically what I'm asking is, if the top bid is equal to or above the lowest offer price, shouldn't the orders be instantly matched up? It's as if there's a little mini pre-open style auction going on. By the time a trade actually goes through there's often not much give in the price to profit from.

And I should mention that these stock aren't overly illiquid either. At the offer price there has always been a fairly large order. I don't get it. Do brokers for stocks screw people over around news time the same as forex brokers?

Any feedback greatly appreciated.

 

[Wysiwyg]

There is a 10 minute freeze on trading when the news is released to the public.Otherwise trading is normal and I have never seen a bid higher and not executed while trading is open.

 

[reece55]

Edmunsta
Where the ASX deems it to be price sensitive, they will normally put the stock in pre-open for a period of about 15 mins for the market to digest the announcement. This is the same as an opening auction in the morning.

Interestingly enough, being someone who actually lodges documents with the ASX online facility for clients, we (the disclosing entity) doesn't actually have discretion to determine what is and what is not price sensitive - makes for interesting times from our end!

Cheers
Reece

 

[edmunsta]

Ah ok. That makes sense then. So basically for price sensitive announcements it just goes into pre-open. Thanks heaps guys.

 

[nizar]

Edmunsta
Where the ASX deems it to be price sensitive, they will normally put the stock in pre-open for a period of about 15 mins for the market to digest the announcement. This is the same as an opening auction in the morning.

Interestingly enough, being someone who actually lodges documents with the ASX online facility for clients, we (the disclosing entity) doesn't actually have discretion to determine what is and what is not price sensitive - makes for interesting times from our end!

Cheers
Reece

Hi Reece.

So who determines whether an announcement is price sensitive or not?
The company?

 

[reece55]

Hi Reece.

So who determines whether an announcement is price sensitive or not?
The company?

The ASX, would you believe......

Some announcements I have lodged that I would consider superfluous/immaterial to the market put the stock in pre-open, where as others do not. Funnily enough, I note that the lodgement of financial statements for smaller entities often is not classified as price sensitive - really makes me feel good, thanks for 2 months of work, apparently it isn't even sensitive enough to make trades stop for 15 mins!!! LOL

Cheers

 

[Mousie]

The ASX, would you believe......

Some announcements I have lodged that I would consider superfluous/immaterial to the market put the stock in pre-open, where as others do not. Funnily enough, I note that the lodgement of financial statements for smaller entities often is not classified as price sensitive - really makes me feel good, thanks for 2 months of work, apparently it isn't even sensitive enough to make trades stop for 15 mins!!! LOL

Cheers

Let's just say it gives you opportunity to accumulate quality shares before the market realises it, unless you're fundamentally not a fundamentalist

 

[tayser]

reece55 - purely out of curiosity - how long does it take the ASX to turnaround announcements - from the time you lodge it with them to the time it's actually released on their website? a couple of minutes? hours etc?

cheers