Orders for Vivendi Universal have been entered on a crossing network for European shares. There is one order from Participant A to buy 100,000 shares, one order from Participant B to buy 200,000 shares, and one order from Participant C to sell 80,000 shares. Assume that the orders were entered in that chronological order and that the network gives priority to the oldest orders. At the time specified for the crossing session, Vivendi Universal is transacted at 17.40 euros on Euronext in Paris, its primary market.
a. What trades would take place on the crossing network?
b. Assume now that all the orders are AON (all or nothing), meaning that the whole block has to be traded at the same price. What trades would take place?

Question

Quizplus · Accepted Answer

The Answer is a. 80,000 shares would be exchanged at 17.40 euros. Participant A would buy 80,000 and Participant C would sell 80,000. Participant A's order has priority over Participant B, so Participant B would not transact. Participant A's order would not be filled entirely (20,000 shares remain unbought).
b. There is no way that the AON condition could be achieved for the three orders; so no trade would take place.

Orders for Vivendi Universal Have Been Entered on a Crossing