Orderly Market

Accrued Revenue


An orderly market is any market in which supply and demand are reasonably equal. So it looks like the orderly market is in a state of equilibrium. This term can also designate a site for the exchange of goods, services or financial securities managed in a fair, reliable, secure, precise and efficient manner. Orderly markets contribute to economic growth.

BREAKDOWN Orderly market

Ordered markets generally have stable and competitive prices, reflecting the true value of the good or service. For the securities markets, a team of specialists in stock market supervision is the entity responsible for ensuring an orderly market. Specialists do this by intervening with their own capital when there are not enough buyers or sellers. This helps reduce market volatility. In a disorderly market, there can be market manipulation, insider trading and other violations. Exchange rules prohibit specialists from trading before investors who have placed orders to buy or sell a security at the same price. If a market is messy, investors may lack the confidence to participate. The Federal Reserve is also trying to promote orderly market functioning by ensuring market liquidity.

Examples of an orderly market

If a particular catalyst threatens an orderly market, a number of actors may be responsible for dealing with that threat and for maintaining an orderly market. For example, on June 23, 2020, when Britain voted to leave the European Union, the director general of the New York Stock Exchange (NYSE), Stacey Cunningham, pulled a sleepless night to appease managers and traders from Wall Street. The Brexit vote could have had a detrimental effect on the U.S. equity market, but Cunningham assured agents and, by extension, shareholders, that the NYSE business model would stabilize and protect the capital of companies listed on NYSE . By design, NYSE Designated Market Makers (DMMs) closely monitor the markets and use their own capital to minimize disruption and create price efficiency. This is particularly useful in a volatile market. The next morning, the DMMs would address the uncertainty on the world market caused by the political upheaval in the EU by adjusting the opening prices of the market to better reflect the real supply and demand for stocks. In its assessment of this market event and its approach to mitigating price fluctuations, the NYSE says it is superior to Nasdaq when it comes to maintaining an orderly market in times of global economic uncertainty and stress.

The advent of Fintech has opened up new conversations about maintaining orderly markets. In 2020, Nasdaq hosted the European Parliament, the European Commission and the European Financial Markets Authority (ESMA) as well as several representatives of national supervisors, stock exchanges and market players to discuss Fintech and its role in helping to facilitate and maintain fairness and order. markets. A point to remember from the discussion was the agreed need for additional collaboration and openness between capital market players regarding the use of Fintech.

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