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In order for a transaction to take place at the Exchange, the buyer and seller first have to agree on
a price. Matching describes the Exchange System's process of collecting entered orders and generating
transactions. Transactions are generated in accordance with a certain algorithm. If at least one order
is available on the other side and the limits, if any, correspond, the new order is matched with and
executed against the best and oldest offer on the other side. This continues until the entire order
is executed or there are no more suitable orders.
Matching rules
In on-Exchange trading, the pricing of all orders is performed according to identical pricing rules set
out by the SIX Swiss Exchange (the so-called "matching rules"). On the basis of these standards, the
electronic Exchange System calculates the opening prices, the prices during continuous trading and
the closing prices of all securities.
Price-time priority
Before the matching process starts, the entered buy and sell orders are arranged or prioritised according
to price-time priority on both sides of the order book. Specifically, this means for the
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buyer: market buy orders are executed first, followed by limit orders
(from the highest limit to the lowest).
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Seller: market sell orders are executed first, followed by limit orders (from the
lowest limit to the highest).
Next, orders placed at the same price are executed according to the time of entry (time priority).
Matching rules for auctions
The Exchange periods that precede and follow continuous trading (pre-opening, opening, close of trading
and post-trading) are called "auctions". They differ from normal trading in that no actual transactions
take place. Orders that exist or are entered during these periods are subject to fictive matching in
the order book. This allows continuous calculation of a theoretical price which is then used as the
opening or closing price.
Matching rules for continuous trading
During trading hours, transactions are concluded on an ongoing basis. Orders and partial orders that
cannot be executed immediately are executed according to time-price priority in the order book. The price
of the last transaction (trade price) is used as the reference price for the next transaction. If a
trade price deviates from the reference price by more than a specified amount, trading is suspended for
a short period of time. The purpose of this is to protect investors against extreme price movements
and prevent misuse.
Further information on the
matching rules.
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