In economic terms, it's the number, size, kind and distribution of buyers and sellers. For investor relations practitioners, the markets globally are moving to a participant model and away from classic NYSE-style auctions, thanks to trading automation and market regulation requiring transparency.
Since the number, size, kind and distribution of participants determine how the buyside and sellside interact with equities, and therefore how equities are owned or traded, it's crucial for IROs to possess basic comprehension of their stocks' market structure.
ModernIR's trading intelligence service, Equity Analysis™, provides insight into your stock's market structure by focusing on executed trades. Traders control liquidity, manage costs on the buyside and sellside, and drive the algorithms that even fundamental investors now use to manage capital.
Understanding this activity can be the difference between telling management
"I have no idea"
OR
"We think the market won't respond much at first, but we're likely to go into a prolonged slide after options because all these derivatives strategies will reset lower. Therefore, we're going to retool our message to highlight core value drivers and concentrate our effort over the next quarter on long-term value investors."
Which would you prefer?
Equity Analysis™ is not stock surveillance. Stock surveillance is based on settlement, which relies on analyst interpretations of data to determine who actually purchased your stock. This is fast becoming irrelevant in an algorithmically dominated market. For more information, please see: Stock Surveillance - Getting What You Pay For?
Request a demo of Equity Analysis™
For additional information on market structure, please see:
Market Structure - Key Words for IRO's Lexicon.
Mary Jensen - Douglas Emmett Inc. (NYSE:DEI)
Vice President - Investor Relations
Equity Analysis™ subscriber since June 2007
"Understanding why your stock goes up or down isn't easy today. Our specialist can't tell me much about what's behind electronic trading, and sometimes half or more of our volume executes away from the exchange. To keep tabs, I've got relationships with traders, bankers, and analytics personnel at the stock exchanges. And Equity Analysis from ModernIR. ModernIR alone clusters volume to highlight what prime program traders are doing, where speculation is occurring, and how our market structure changes when real investors are behind order flow. When my management team can differentiate between rational and speculative market behavior, they're more effective."
