Tuesday Markets Auction

One of the key roles and main business models for Tuesday markets is market making. Tuesday markets choose to make markets for the 3 stocks so far and these are Africa Eats (EATS), Ziweto Enterprises (ZWTO) & Elite Meat Processing (ELIT).

As a market maker, we primarily provide liquidity in the stock market for the stocks we make markets for. What this basically means is Tuesday Markets should always have an inventory or cash and shares to make trades on the orderbook at any one time. We chose for this to happen during our Tuesday weekly closing auction. The auction happens every Tuesday between 2pm - 2:30pm Mauritian time

Below are the auction rules as the per auctions set by the Securities exchange of Mauritius that govern Tuesday markets as Market Maker:

Registration and Appointment (Rules 21.74-21.76)

21.74 Any member of the Exchange may register as a Market Maker. It is not mandatory for a Market Maker to be a member of the Exchange.

21.75 Each High Growth company should strive to have one or more registered Market Makers to make a market for its security.

21.76 Appointment of a Market Maker to a security shall be registered with the exchange.

• Unless otherwise agreed with the Exchange, a market maker may not de-register from a security within six months of its initial registration or re-register in a security within three months of de-registration in respect of the same security.
• Except for (a), a Market Maker can de-register for a security by notifying the exchange.
• Where the Exchange considers it appropriate it may de-register a market maker from a security.

Market Making Methods (Rule 21.77)

For each security where a Market Maker is appointed, it must make a market in one or both of the following methods:

• placing a bid and an offer during normal market hours; and/or
• participating in closing auction(s).

Order Requirements (Rule 21.78)

The market making orders must include at least one bid and at least one offer:

• Where the price of the best offer is no more than 12.5% higher than the price of the best bid (where the best offer is the lowest priced offer, the best bid is the highest priced bid);
• Where the likely market price lies between the best bid and best ask
• The quantity of each order must be at least 100 shares

Closing Auction Participation (Rule 21.79)

When participating in the closing auction, the Market Maker:

• should endeavour to place at least one bid and one offer within the first 15 minutes when orders are open for the closing auction, following the rules of 21.78;
• may adjust the bid and ask every during the closing auction, adjusting the prices toward the estimated settlement price;
• may, in the last 15 minutes of the auction, withdraw any or all prior bid(s) and offer(s), replacing them with a single bid or single offer with a price between the best bid and best offer of the auction order book (or with a market order), with a goal of balancing the imbalance between the estimated total bids and estimated total offers that will close during the closing auction;

Minimum Obligations (Rule 21.80)

A Market Maker must fulfill the market making obligations at least one day per week, for at least one hour per week during normal market hours or for at least one closing auction per week.

Obligation Waivers - Stressed Market Conditions (Rule 21.81)

The market making obligations can be waived by the Exchange during stressed market conditions, including:

• when all trading is halted on the Exchange,
• when trading is halted in the appointed security,
• when the most recent traded price in a security is more than 10% than the rolling weekly average price for that security,
• or any other deemed stressed market conditions by the Exchange.

During stressed conditions the Market Maker may place bids and offers with a spread up to a maximum of 20%, to help the market find a new price for the security.

Obligation Waivers - Capital Constraints (Rule 21.82)

The market making obligations can be waived by the Exchange if the Market Maker is out of capital and credit to place and fill a required bid or insufficient inventory of shares to place and fill a required offer. The Market Maker must inform the Exchange in either of those cases, or for any other reason that prevents the market making obligations from being filled.

Website Disclosure Requirements (Rule 21.83)

A Market Maker must publish information on which securities it is registered on its website.

This information must include:

• The name and symbol of each registered security
• The day(s) and times of the market making operations

and should include:

• The most recent closing price of each security
• The most recent closing auction price and volume (if there is a closing auction)
• The market maker's most recent best bid price and best ask price