You are here: About us / Newsletter / 2010 / No. 1/2010
Introducing Oslo Børs MPS
Most people are aware that the days of stockbrokers trading in person at Oslo Børs are long behind us. However, there is still a small trading desk at the Oslo Børs building, and trading in derivatives is supported by derivatives brokers who are employed by the exchange.
MPS (Market Place Service) is staffed by experienced, authorised brokers who are responsible for assisting member firms of Oslo Børs in various ways, such as carrying out large and/or more complicated derivatives trades, as well as combined trades that involve various different derivative contracts. The staff of the MPS desk are employed by Oslo Børs and operate neutrally for all member firms in accordance with strict rules.
Here is one example of how MPS assists member firms: A broker working for a bank needs to carry out a transaction that involves buying one type of option while simultaneously selling a different type of option. The transaction is so large that it may be difficult to execute the trades at fair market prices in the electronic market. The broker contacts MPS, and MPS then communicates the broker's interest order to other member firms on an anonymous basis. In addition, thanks to the established collaboration between Oslo Børs and the UK derivatives marketplace EDX, MPS can also contact firms in the UK. Once negotiations between the buyer and seller have been completed, with MPS acting as the intermediary, the trades are immediately input to the Oslo Børs derivatives trading system from where they are submitted for clearing and post-trade administration.
The example described above relates to the purchase and sale of option contracts, but could equally well apply to forwards, futures, and OTC derivatives, as well as to combinations of these contract types. It is not unusual for cash equities to also form part of such transactions.
MPS also carries out a wide range of other duties, such as collating statistics, arranging training, providing information, monitoring market makers, etc.
This form of interaction between a powerful electronic trading system and personal assistance with trading has proved to be a successful service for the market, and has been copied by a number of other marketplaces. The daily contact between MPS and market participants also gives Oslo Børs a unique opportunity to structure and develop a marketplace that meets everyone's needs.
