How does Trading work?

Trading on Otis is similar to the stock market, where anyone can buy and sell shares of cultural assets.

What is Trading?

Trading works similar to the stock market where anyone can buy and sell shares of cultural assets.  Otis opens assets for trading approximately 3-4 weeks after they fill in pre-sale. There’s no lock-up period for investors who purchase shares in the pre-sale.

 

How does Trading work?

Otis uses an auction model to clear trades and set new prices.
    1. You can place a bid (buy order) or ask (sell order) 24/7.
    2. Each day at 2PM ET, prices are set based on where the most shares would clear, and overlapped bids and asks are removed from the order book.
    3. The orders are then matched and cleared at 9PM ET the same day.

Why is the trade screen asking me for a maximum or minimum price?

Every bid or ask requires a price and share amount. Prices set by investors in their orders are used by the Otis Auction model to set clearing prices for assets. When submitting a bid you will be asked for a maximum price per share. This means you are willing to pay up to the price you entered, and you could potentially pay less. For example, if you entered a bid for $20, you are willing to purchase the shares up to $20, but might end up paying $15 if that is the daily market clearing price. 

When submitting an ask you will be asked for a minimum price per share. This means you are willing to sell as low as the price you entered, and could potentially receive more. For example, if you entered an ask for $20, you are willing to sell shares for as little as $20, but might end up selling shares at $25 if that is the daily market clearing price. View the order book, price charts and the learn tab to help inform what price makes sense for you. 

 

How does the clearing price get set with the auction model?

Otis will price assets based on where shares overlap in the orderbook. 

Here is an example:

  • The clearing price will be $15 because that’s where bids and asks overlap. 10 shares will be matched and cleared.

Price

Bids

Asks

Shares Cleared

$20

0

20

0

$15

10

10

10

$10

20

0

0

 

Most assets will have orders that overlap at more than one price. In this case, Otis will set the clearing price to the price where the most shares will clear. 

Bids at higher prices are eligible to clear at lower prices, and asks at lower prices are eligible to clear at higher prices. This could impact the clearing price. For example, a bid for 5 shares at $20 would be eligible to clear at $10 because it's a better price for the buyer.

Here is an example where many prices have overlap:

  • The clearing price will be $15. 
  • Only 5 shares would clear at $10 or $20, but 15 shares would clear at $15. This is because shares at $20 bids and $10 ask are eligible to be cleared at $15.

Price

Bids

Asks

Shares Cleared

$20

5

20

5

$15

10

10

15 

$10

20

5

5

 

When there are more bids than asks or vice versa, then a trade imbalance is created. Shares will be allocated to orders with the best prices. If there is a tie, shares will then be allocated based on time of submission.

Here’s an example of a clearing imbalance and allocation:

  • There is a trade imbalance since there are 15 bids and 13 asks at the clearing price of $15.
  • Bids at the best prices would get priority allocation for the ask shares. This means bids at $20 price would get shares allocated to them before bids at the $15 price. 
  • The 2 remaining bid shares at $15 that were not matched will automatically be resubmitted at their original price for the next trading window. 

Price

Bids

Asks

Shares Cleared

$20

5

20

3

$15

10

10

13 

$10

20

3

5

 

It’s possible the most shares will clear at multiple prices. If multiple prices clear the most shares, then the clearing price would be the average of those prices.

Here’s an example where multiple prices can clear:

  • The clearing price will be $15 since it’s the average price of where the most shares clear.
  • Bids at $16 and above and asks at $14 and below will be matched.

Price

Bids

Asks

Shares Cleared

$20

5

20

5

$16

10

10

15

$15

   

15

$14

10

10

15

$10

20

5

5

 

What happens if my order doesn’t get cleared or is only partially filled?

Your order may not get cleared if it doesn’t meet the clearing price or doesn’t match with another order.

If your order doesn’t meet the clearing price, it will remain open for the next daily trading window. Your order will remain open until it’s matched and cleared or canceled by you. Find how the clearing price gets set in “How does the clearing price get set with the auction model.”

Your order may meet the clearing price but may not get a match or only get a partial fill due to a clearing imbalance. See “Clearing imbalance and proration” above to understand why that may happen. Orders that are not matched or only partially matched will automatically be resubmitted for the next trading window at it’s original price. 

 

All securities-related activity is conducted by Dalmore Group, LLC, a registered broker-dealer and member FINRA and SIPC, located at 525 Green Place, Woodmere, NY 11598.