AOM trading performs the order matching process according to price-then-time priority based on algorithms and without human intervention. After brokerage houses electronically send buy or sell orders to the SET mainframe computer, the SET CONNECT system queues the orders and arranges them according to a price-then-time priority. This means orders are first grouped according to price, with the best price taking precedence. Then, within each price group, orders are arranged according to time.
There are two matching methods: continuous order matching and auction method. Continuous order matching procedures operate during the regular trading sessions. The SET CONNECT trading system continuously matches the first buy and sell orders in the queue, and at the same time confirms each executed transaction via the member's (broker's) terminal. Auction matching is utilized in calculating the opening and closing prices of a security at the opening and closing of the trading hours. This method allows brokers to enter their bid/ask orders to be queued for matching at a specified time at the price that generates the greatest trading volumes for that particular stock.
2. Trade Report (TR) Trading
SET CONNECT also allows brokers to advertise their buy or sell intentions by announcing bid/buy or ask/sell prices. Members may then deal directly with each other, either on behalf of their clients or for themselves. Prices may be adjusted during the negotiation; hence, the effective executed price may not be the same as that advertised and may not follow the price Tick sizes rules. After concluding negotiations, dealers must report details of the trade to the SET CONNECT system to be recorded.
Members may trade by Trade Report in the following types: