Raising equity for local SMEs, Investbx incorporates a stock market for West Midlands based companies.
When a company first makes its shares publicly available it will decide the price at which it does so (the offer price as detailed in an admission document).
This price will apply up to the point when the shares commence trading via Investbx and thereafter the normal auction price process applies.
The share price is set in direct relation to the levels of supply and demand for shares in each Investbx traded company.
Investbx operates just like an auction; investors who already hold shares will offer them for sale, showing how many shares they want to sell, and at what price. Investors seeking to buy shares in that stock will place their bids, detailing how many shares they want to buy, or how much they want to invest, and the maximum price they are prepared to pay for them.
As well as contributing to the formation of the final auction price, buy and sell orders received in between each auction should give rise to an 'indicative price'. This shows what the shares would trade at were the auction to take place at that moment, rather than at the actual auction date.
Orders are received continuously up to the pre-determined auction 'cut-off' time. Each order will have the potential to impact the final price of shares when the auction takes place and investors can add, amend or cancel orders at any point up to the pre-determined auction cut-off time.
When the auction period closes, orders are checked by the Compliance Team and the price at which the shares will trade is then verified; this is usually the indicative price showing immediately prior to the auction cut-off. Price calculation is an automated process, based on an algorithm, which establishes a single price, based on the point at which demand meets supply.
Some stocks listed on the London Stock Exchange or traded on the Alternative Investment Market may also be dealt via Investbx. Dual trading with Investbx provides the opportunity for orders which cannot be met within the bid/offer spread on these markets to be included in the regular Investbx auction for that stock.
Buy or sell orders placed 'at best' or at an immediately achievable limit are dealt directly with the London Stock Exchange (LSE) or AIM, as appropriate. Where a limit order cannot be dealt immediately it is placed via Investbx, where it will be continually tested against the LSE or AIM market price and goes to form the order book for the next Investbx auction.
Hence, there is the potential to match buy and sell orders from investors outside of the LSE/AIM market-maker system. Typically these will be orders where limit prices have been set within the quoted bid offer spreads.
In essence, therefore, your order to trade will be executed through whichever market first enables you to trade at your required price level. This innovation enables investors to buy or sell such stocks at a price which may otherwise have fallen within the bid/offer spread quoted on a different market.
Investbx also provides a platform on which Open Ended Investment Company (OEIC) or Unit Trust Fund Managers can administer their funds' investments. OEIC shares and Unit Trust units are traded on the basis of their 'net asset value' (NAV) rather than using the supply and demand model that applies to equities. Consequently the Investbx price shown is an indicative valuation of shares/units in the Fund, based on the LSE's '15 minute delayed' prices.
In general, Fund values will be calculated daily, based upon the mid-price of the underlying investments at midday. The updated price is announced at 13:00 hours each business day. Where this varies, details for each individual Fund will be provided by the Fund Manager.
In order to facilitate this process, and ensure price clarity for new buy/sell orders, trading is suspended in Collective Funds between 12:00 and 13:00 hours.
