This was the ASX response to my email about trading in AJA last week
RE: Trades in Astro Japan Property Group (AJA) Thank you for your communication regarding recent trading in shares in AJA. Please note that there are no designated Market Makers for AJA or any other equities for that matter. Market Makers operate in the Options and Warrants Markets only. Your observations were passed on to the ASX Surveillance unit for analysis, which reviewed the recent trading in that stock. Surveillance noted that there were many small parcels traded and considered that these were most likely the result of a DMA (Direct Market Access) or algorithmic trading programme used by a broker which may have been attempting to match the VWAP in AJA. The trading is not considered to be manipulative. You may be aware that most brokers now use trading applications such as trading algorithms to enter orders into the market. These algorithms have varying styles and execution strategies based on the historical data on which they are modelled and allow orders to be sent directly on to a trading platform without human intervention. One form of DMA trading involves a strategy whereby a single order might be split up into several smaller orders which are submitted periodically (say, every 3 minutes). This type of DMA trading is normally unremarkable and has no impact on the price or volume of a stock. However, occasionally market observers may see small volume orders being submitted to a trading platform in a less liquid stock which result in small volume trades. This does not necessarily mean that a low execution trade size, even as low as one share itself, is manipulative. Repeated one share executions may be part of a broader legitimate algorithmic execution strategy. Small execution trade sizes (by definition) are unlikely to give a misleading appearance for a product, particularly of active trading. In this regard ASX does not set rules or limits concerning the minimum trade size or order size1, allowing ASX Participants to enter orders of any size, with the size of the order being left to the discretion of the broker or its client. However ASX does require brokers to have in place appropriate electronic pre-execution order filters to ensure that their DMA trading does not interfere with the conduct of an orderly market or facilitate manipulative trading. ASXs experience indicates that when a client seeks to manipulate a stock, and has a particular motive for doing so, manipulative trading is easier to carry out if the client has active control of their orders. That is, manipulation is easier to achieve if the client submits orders to the market manually at the time and price at
www.asx.com.au 1 New opening positions cannot be created of a value below $500. which they will achieve maximum price impact. Algorithmic trading usually does not allow this, given that it is programmed trading, executed without the intervention of a broker. Further details and articles regarding DMA trading can also be found by searching under DMA Trading on the ASX website. Thank you once again for raising your concerns with ASX. Yours sincerely,
