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How to trade securities?
Market Members
Only companies that have obtained “Membership status” granted by Euronext are allowed to participate directly in the trading activities on Euronext markets. Accordingly, investors cannot trade directly in the Exchange. They require a Member to execute orders on their behalf at the Euronext trading platform. The accredited intermediaries for Euronext Lisbon may be found in Members list | live (euronext.com).
Central Order Book and Trading Platform
Euronext operates an electronic Order Book in which orders entered and possibly amended are held until they are matched, expired or withdrawn. Specifically, Members introduce the buy and sell orders they receive from the investors in the Central Market Order Book. These orders can be of different types (market orders, limit orders, stop orders, indexed orders) and must contain a series of indications that are described in the Euronext Market Rules. Typically, an order should have an indication, at least, of the price preference, the volume/quantity and the term.
OTC trade (“Over The Counter”)
A trade that results from a bilateral agreement between a buyer and a seller directly, who agree on a price for the trade.
Method of trading orders (continuous and auction)
Shares are traded in the Euronext Trading Platform either continuously, for shares with sufficient liquidity (even if that liquidity is brought through a liquidity provider that meets certain legal and contractual obligations), or at auction for the least liquid shares. Bonds trade at auction, but mainly OTC.
***Continuous trading***
In addition to the shares that are constituents of the main Euronext indices (e.g. Euronext 100, Next 150, PSI, etc.) and those served by a permanent liquidity provider *, other shares traded continuously have an annual number of transactions in the Central Order Book of at least 2,500.
A continuous trading session consists of several steps:
► Pre-market opening: orders entered by Members are accumulated without giving rise to a transaction.
► Opening auction: once open, the Trading Platform seeks to match orders for each security.
► Main trading session (from 9.00a.m. to 5.30p.m. CET): the market operates continuously, therefore negotiations are possible and carried out as soon as a buy order meets a sell order and prices vary freely according to supply and demand.
► Pre-Closing phase after 5.30p.m. to 5.35p.m. CET: orders accumulate without transactions taking place.
► Closing Auction at 5.35p.m. CET: the closing prices for continuously traded securities are determined by the price set at the Closing Auction.
► Trading-at-last from 5.35p.m. to 5.40p.m. CET: orders can only be entered and matched at the closing price.
* In order to improve liquidity listed the issuer companies may set up and sign a liquidity contract with a Member who undertakes to ensure the permanent presence of a range of prices and securities in the Order Book.
***Auction trading***
For shares that are not traded continuously and bonds, the trading is processed daily via two auctions at 11:30a.m. and at 4:30p.m. CET. Fixings give rise to the comparison of buy and sell orders accumulated since the opening of the central order book without resulting in a trade. Transactions are then possible during a defined period (one hour) during fixing.
All orders on Euronext Lisbon, Euronext Growth and Euronext Access are centralised by the central order book in order to achieve an equilibrium price depending on the supply and demand for each security.
How are securities identified in the secondary markets?
Admission to trading is materialized by the assignment of specific identifiers to listed companies/securities.
When admitting securities, the investor community and various external stakeholders shall be able to easily and safely identify the security and its Issuer. For this purpose, different codes and identification symbols are assigned to the company when it is admitted to a trading platform.
Trading symbol (ticker)
The mnemonic code (or Ticker or Trading Symbol) is a series of characters, often considered an abbreviation/acronym, that represents the stock traded on the stock exchange. Euronext Lisbon is responsible for the award procedures, its allocation and its publication.
ISIN Code
The ISIN (International Securities Identification Numbering) is an international standard set by the International Organization for Standardization (“ISO”). Administered by a National Numbering Agency (“ANI”) in each country, it is used for the numbering and identification of specific financial instruments, such as stocks and bonds, and functions as a serial number for these instruments. For Portuguese issuers, the ISIN code for listed securities is set and administered by Euronext Securities. The ISIN codes for each listed company are disclosed on the Euronext´s website.
LEI Code
The unique identifier of financial market participants for trade reporting to trade repositories (Legal Entity Identifier or LEI code) is a mandatory code for all Issuers and must be sent to Euronext Lisbon in the Issuer’s admission file. It allows a unique identification of a legal entity on a global scale active in international financial markets. The code is granted by one of the recognized LOU (Local Operating Unit). A list of accredited LOUs can be found on the website https://www.gleif.org/en/about-lei/get-an-lei-find-lei-issuing-organizations. LEIs must be renewed each year via the managing LOU.
