Funderbeam Marketplace Changes
What are the changes and why?
Since being granted a trading licence in Singapore, we prepared to launch our next generation Marketplace on the 29 January 2020. From the launch, the trading of investments will be operated by our Singapore entity, Funderbeam Markets Pte. Ltd, rather than by Funderbeam Markets OÜ in Estonia. We believe this will allow us to deliver a number of positive benefits to investors.
Below is an overview of the announced and/or implemented changes including the date of release. This list will be updated as we will be continuing our work to roll out improvements to functionality and features during the course of 2020.
New Marketplace Rules – 29th January and 5th March
As a foundation of the new Marketplace, the new rules were originally adopted on January 29th and outline all of the necessary details including key elements required for Singaporean legal and regulatory reasons. The updated rules will be updated again on March 5th with additional changes. The rules can be read here.
Introduction of Automatic Matching and Partial Filling – 5th March
Prior to this feature, we required Investors to manually select and match orders on a more basic version of our Marketplace. Now we are offering an automated order-matching process that locates the best available matching orders.
This automated matching process partners with the partial filling feature, as now the Funderbeam Marketplace will allow for larger orders to be filled in part by smaller ones. The unfilled part of the order will remain available for matching, until expiration, and will not require additional action from the investor.
This process is a step towards decreasing the barrier to a more liquid trading environment, and when combined with the pre-funded wallet (introduced on the 29th of January), offers a better chance for a shorter transaction period.
Introduction of a Trading Fee to the Seller of 0.5% – 5th March
This fee is applied to the value of the completed trade and charged directly to the Seller. An indicative fee will be shown to the seller, when a sell order is placed, prior to commencing the trade. The value of the fee is subject to change depending on whether the order is partially filled or matched at better prices that result in higher sales proceeds to the seller.
This fee was agreed to after much consideration and consultation with investors and active traders on the platform. The fee helps support and maintain essential development to ensure that Funderbeam can continue to offer global liquidity by attracting more investors and companies.
Introduction of Over-The-Counter (OTC) trading service – 5th March
Previously we could only offer this under special circumstances, now we are able to offer this upon request/agreement by both Buyer and Seller. The OTC trade has a cost of 25€ for buyer and seller per instrument, please contact customer support in these cases for instructions on how to complete this trade.
Introduction of a Price Corridor – 5th March
With the offering of automatic matching and partial filling, the need to offer widely varied pricing depending on the amount of the investment being bought or sold is now no longer necessary.
The price corridor offers a guide based on a “moving” volume weighted average market price to help protect investors from mispriced or mistaken orders.
In the event of key company announcements that may impact trading price, all orders will be cleared and as a result, the price corridor will be reset. To avoid an orderbook of outdated or unfeasible orders, the expiry date for orders will also be capped at 30 days.
Introduction of the pre-funded wallet – 29th January
This functionality is a regulatory requirement to ensure all matched orders are fulfilled. This means that one cannot place any buy orders on the Marketplace without having enough available funds to fulfil them.
This functionality offers the opportunity for a range of improvements that require matched orders to be fulfilled. Additionally this decreases the settlement period from up to 14 days down to a few hours and removes the risk of trades not being completed.
Removal of priority rights – 29th January
Before our Singaporean licence, we were restricted with Marketplace limitations such as needing to offer mandatory priority right period for existing investors ahead of non investors. We have now removed this restriction and now all investors are free to trade without the risk of interrupted trades.
Frequently Asked Questions
How does Automatic Matching and Partial Filling work?
An investor enters an order into the system (filling in the required fields of Investment name, order type, order price, order quantity, and order expiry date). The system will accept the order, including checking the Investor’s wallet to reserve the funds for the order (where applicable), and the order is placed into the Orderbook.
Upon entering the orderbook, the matching engine automatically works to identify the relevant matching orders and starts to fill the open orders, firstly by best price and then by the order that those orders were received. The orders may or may not be matched against exact orders, but as long as there are orders which have prices at or better than the order price, these will be matched against the investor’s order to give him/her the best execution based on his specified order requirements.
Can I still manually match orders?
With the introduction of the matching engine, no manual matches will be accepted on the Marketplace. We are able to offer Over The Counter (OTC) orders in specific circumstances, please contact customer support in these cases.
Why have a price corridor?
With the introduction of pre-funded wallets, making order matching and settlement happening in a short window, investors can now place their orders with confidence in getting filled, and do not need to place orders with long-dated expiry dates and wide deviations from the marketplace. With the introduction of additional liquidity from other market participants whom we are working to bring to the Marketplace, we also foresee increased liquidity allowing for more market depth and trading volume on the Platform, akin to a true global exchange. Hence, we have introduced a price corridor to help our investors place their orders in a price range that will very likely provide them with a matching counter order.
What is the price corridor and how does it affect my orders?
The price corridor is set at 20% above and below the volume weighted average market price, set on the past 5 trades in the syndicate. When completing the details in setting an order, the full corridor will be displayed showing the highest and lowest an order can be placed at. Orders outside of the price corridor will not be matched.