TFEX has chosen for its derivatives platform the most efficient state-of-the-art technology from Cinnober from Swenden. With this system, TFEX is able to provide an electronic trading system that is modern, reliable and efficient, allowing transactions that are convenient and cost competitive.
All TFEX derivatives contracts are executed, cleared and settled electronically through its integrated trading and clearing platform. The platform provides a range of exchange-traded derivatives contracts for futures and options, as well as for different types of orders, such as combination or spread orders. TFEX offers two trading methods to facilitate different types of transactions.
Investors can trade TFEX’s products by placing orders via their brokers which are TFEX members (Members). Only Members are allowed to access the exchange trading system. There are two trading methods namely the Automatic order matching and Block trading:
Automatic Order Matching
TFEX’s trading engine will match orders according to price first, followed by time. Once an investor sends a ‘buy’ or ‘sell’ order to the TFEX trading system via a member’s front-end facility, the system queues the order according to ‘price’, with the best price taking precedence. The system then orders in each price group by ‘time’ before being queued and automatically matched.
Block Trading Facility
To respond to institutional investors’ need for large volume trades and ensure that these transactions are confirmed at one single price, TFEX has introduced a block trading facility. Block trading is a privately-negotiated order, apart from the public auction market, at a level over the minimum volume set for each type of contract. Members may deal directly with each other, either on behalf of their clients or for themselves. After concluding negotiations, members must record details of the block trade transaction with the trading system. As such, block trading not only makes it convenient for our institutional clients but also helps alleviate unintended market impact and cost of large volume trades.
Though TFEX requires that every order sent to the central trading system contains the client’s account number, it permits omnibus accounts. There are no trading restrictions on foreign investors on } TFEX, nor the necessity for special or qualified foreign institutional investors’ accounts, so foreign institutional investors who execute on behalf of their clients can trade on TFEX conveniently, in line with international practices.
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