There are generally 2 types of trades in the stock market. Trading Representatives refer them as ‘Market Deal’ or Off-Market Deal’.
Market Deal
When investors submit the Buy/Sell order through the trading platform, it is called Market Deal.
Through the trading platform, Buyer or Seller does not predetermine the matching of the order at particular price and quantity. It is based purely on market demand and supply.
When the Buyer is more desperate than Seller for a particular stock, the stock price will normally goes up. This means that investors are more willing to buy at a higher price. Since Buyer anxious to confirm the Purchase of the stock, he will input his Buy order at a higher price than the rest. As the price soars, more anxious buyer will submit the same instructions for higher prices which in turn causes the stock price to go up.
This applies to the reversal too. When investors wanted to sell off a particular stock, the stock prices will goes down. Desperate investors who want to get out of the stock as soon as possible input a price lower than the rest which again drives down the stock’s price.
Therefore Market Trade will be considered as NORMAL Trading and transactions performed through SGX auto matching system based on market demand and supply.
Off Market Deal
Off-Market Deal is performed based on a pre- agreement price and quantity by the Buyer and Seller. Some of the common reasons are listed below:
(a) Seller anxious to dispose a big block of stock fast. If the Sales were to be executed through the Normal SGX matching system, this could caused the stock’s price to fall drastically and thus not allowing the Seller to dispose his big block of shares at the price he wanted.
(b) Buyer wanted to buy a big block of shares at a price better than the current market price. If the Buyer were to go through the normal matching system, the stock price will be driven above the price that the Buyer wanted before all the quantity can be fulfilled.
(c) Change of major ownership or shareholders. New owner may wish to buy directly from one of the major shareholders in the company. E.g. Public listed Company A’s major shareholders owned 51% of the listed company and they received an offer from Mr K who is interested to own this company. Thus the fastest way for Mr K to buy over the company would be acquiring the shares directly from the major stakeholders.
Off-Market Deal is also known as ‘Married Deals’.
SGX-ST Rules on Married Deals
SGX-ST Rules permit married deals to be executed only if they meet the minimum direct business thresholds of at least 50,000 units or S$150,000 in value. In addition, public disclosure must be made within 10 minutes of execution for married deals executed during market hours and within the first half hour of trading on the next trading day for married deals executed after market hours
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