The ౠminimum guaranteed fill (MGF) facility is a tool offered by the Toronto Stock Exchange (TSX) that requires market makers to fulfill a minimum number of retail orders at the best bid or ask price if there is otherwise not enough liquidity from the order book.

How an MGF Order Works

The minimum guaranteed fill (MGF) facility is a trading mechanism designed to benefit investors on the Toronto Stock Exchange (TSX). It provides guaranteed fills on small orders at the TSX Best Bid and Offer (TBBO) when there's not enough 澳洲幸运5官方开奖结果体彩网:liquidity to fill an investor's ord☂er. This facility applies to all TSX-listed securities with assigned Market Makers.

MGF is particularly valuable for retail investors and smaller institutional orders, as🐟 it guarantees partial execution even in less liquid market conditions. The facility is designed for retail investors and excludes orders from algorithmic trading, active daily traders, and large institutional traders.

To access the MGF facility, traders must use pre-qualified MGF-Eligible Trader IDs and mark their orders as "MGF-YES". Eligible orders must not exceed the MGF-Eligible Order Size, which is defined as the size of the MGF plus the TSX best bid (for sell orders) or offer (for buy orders). These sizes are listed in the table below.

Example of the MGF Facility

Let's consider a scenario using the TSX's MGF facility for a stock, XYZ, in Canada's S&P Composite index. Based on the provided average MGF sizes, we'll assume an MGF size of 2,300 shares for this example, given an order size of at least 4,500 shares.

澳洲幸运5官方开奖结果体彩网: Order details:

• Buy 3,000 shares of XYZ at market
• Marked as "MGF-YES"
• MGF-Eligible Order Size: 2,600 shares (2,300 MGF + 300 at best offer)

澳洲幸运5官方开奖结果体彩网: Execution:

1. 300 shares filled at $25.05 (existing liquidity in the order book)
2. 2,300 shares filled at $25.05 by the market maker (MGF facility)
3. 400 shares remain unfilled

In this example, the investor receives a guaranteed fill for 2,600 shares at the best offer price of $25.05, even though only 300 shares were available in the visible order book. That is because the MGF facility provided an additional 2,300 shares of liquidity at the best offer price provided by the stock's market maker(s). The remaining 400 shares of the order would need to be filled through standard market mechanisms at the next best offer or could be canceled, depending on the order instructions.

Benefits of MGF Facility

Fair pricing

MGF orders ensure that eligible investors receive fills at the best available market price (the TSX best bid and offer), even when there isn't enough visible liquidity in the order book. In doing so, this mechanism helps protect smaller investors from price slippage that might occur when trying to execute larger orders in less liquid stocks.

By guaranteeing a minimum🍌 fill size, MGF orders can help minimize the price impact of larger retail trades, maintaining fairer and more stable prices for all market participants.

Enhanced market liquidity and efficiency

MGF orders effectively increase the available liquidity at the best price levels beyond what's visible in the order book. The facility is particularly beneficial for stocks that may not always have deep liquidity, ensuring that trades can still occur at competitive prices.

MGF orders can, therefore, lead to quicker trade executions, as investors don't need to wait for sufficient liquidity to build up in the visible order book. By filling orders more quickly and with less visible impact, MGF orders can help reduce the market impact of larger trades, leading to more efficient price discovery.

The facility provides a middle ground between fully transparent limit orders and potentially disruptive large market orders. Here's what it helps accomplish:

• Support for other investors: By catering to retail and institutional investors making investment decisions (rather than high-frequency traders), MGF orders help maintain a market that serves its core purpose of capital allocation and investment.
• Published MGF sizes: The real-time publication of MGF sizes for each eligible security allows all market participants to factor this additional liquidity into their trading strategies.
• Increased investor confidence: The guarantee of a minimum fill can boost confidence among investors, particularly those dealing with smaller or medium-sized orders.

The Bottom Line

The TSX's minimum guaranteed fill (MFG) facility provides added liquidity for retail investors by requiring market makers to step in and provide additional shares on the best bid or offer up to a certain amount. This amount depends on the stock's price and whether it is an index constituent.