Our Business

Our Unique Approach to Providing Liquidity

For two decades, global markets have been evolving in ways that replaced human judgment with automated systems. Computerized market makers have made the most-actively traded stocks even more efficient and cheaper to trade for investors.

But they’ve largely ignored less-liquid issues, including small-capitalization and emerging-growth-company shares. These stocks don’t fit into the automated market participant business model of smaller per-share profits scaled across faster, higher-frequency trading.

And many are nearly impossible to hedge as part of automated strategies, because they are not correlated with other financial instruments or included in popular indexes. That’s where Select Vantage’s unique approach comes in.

Our trading decisions are made by nearly two thousand individual human traders around the world, each with unique perspectives, areas of specialization and techniques that work for them.

Unlike computer algorithms, these traders can respond dynamically to inefficiencies, periods of market stress, company news or other unusual activity. And our shared market-access, data, risk-management, compliance, training and education infrastructure enables each trader to pursue strategies that would not be profitable for them acting alone, especially in the small-and micro-capitalization stocks where purely automated, speed-sensitive strategies don’t work.

In short, our unique approach to making markets produces truly unique liquidity where investors need it most — in thinly traded stocks.

Our Liquidity: Supporting Investors and Issuers Globally

Our unique marriage of individual human judgment and cutting-edge technological infrastructure enables our traders to provide valuable liquidity that supports thinly traded stocks.

Unlike purely automated market participant, we’re not focused on being the fastest player in highly liquid names, or constantly cancelling and replacing our quotes to maintain queue position and manage ultra-short-term risk.

Instead, our traders provide high-quality, long-duration liquidity, with low order-to-cancel ratios (see Liquidity Data table below). Most of our trading is passive: we post orders to buy or sell shares at or better than the best quoted price, and other market participants access our resting liquidity.

That helps support issuers and investors, particularly in small- and micro-cap markets, all around the world. For example, we account for about 18 percent of the value traded in stocks listed on Canada’s TSX Venture Exchange, which is widely recognized as the world’s premier market for emerging-growth companies.

Liquidity Metrics

(Q3 2018)

 

Region APAC EMEA NCSA

1. Avg Participation % represents the average percentage of traded volume represented by SVI trades.
2. Order-to-Fill ratio is calculated as the number of orders entered over the number of executions.
3. Order-to-Cancel ratio is calculated as the number of orders entered over the number of orders cancelled.
4. Cancel-to-Fill ratio is calculated as the number of orders cancelled over the number of executions.

Passive Fill % 76.03 56.91 48.27
Avg Participation %1 1.05 2.37 3.18
Order-to-Fill Ratio2 3.13 1.64 1.93
Order-to-Cancel Ratio3 1.18 1.86 1.64
Cancel-to-Fill Ratio4 2.35 1.07 1.4
Avg Order Size (shares) 28,579 2,928 2,365
Avg Trade Size (shares) 13,500 1,599 709
Avg Cancel Duration (seconds) 16,257.31 2,266.91 2,195.75
Avg Execution Duration (seconds) 2,288.86 630.78 478.39