Out of sight and out of mind, just like the brokers and investors like it

Most people, at the least, have heard of the Pakistan Stock Exchange (PSX) and the KSE100 index. Some are even aware of the fact that there is an odd lot market and a futures market that works in parallel to the stock market itself (don’t worry if this has come as a news to you). However, even fewer people are aware of the existence of a Negotiated Deal Market (NDM) and how it works. 

Negotiated Market

Let's get some of the basics out of the way. A negotiated market is a secondary market set up by the exchange itself. The purpose of the market is to allow a buyer and seller to be able to negotiate the terms of the deal away from the market. They can carry out a trade based on the terms that are suitable to the both of them. Such a trade can be carried out between two brokers who are operating in the market or between two clients who can be facilitated through brokers as well. 

On the face of it, such trades are seen to be time consuming, require additional effort and are not transparent in their nature. The prices set for these trades can vary from the prevalent market price. Trading is supposed to be simple, clear and fast but trades carried out in the NDM market feel like they are arduous and the price discovery lacks transparency. It is this lack of transparency which makes these trades intriguing and can even give an impression of being unfair or inequitable to the market.