Tressel Limited - Secondary Market Trading Policy
1. Introduction
Tressel Limited (Tressel) operates a secondary market on its equity crowdfunding platform that allows investors to buy and sell shares in PropertyCo (Secondary Market).
In order to provide a transparent and fair-trading environment for investors, it is essential to have clear trading rules and measures for the Secondary Market. This policy helps to minimise the risk of market manipulation and ensure that investors can trade with confidence. Below are the key rules and measures we implement for the Secondary Market, including with considerations for setting appropriate trading bands and relevant review procedures for transactions.
2. Responsibility
This policy applies to all personnel who are involved in the management and administration of the Secondary Market. The Chief Operating Officer (COO) is primarily responsible for ensuring that the procedures and controls outlined in this policy are effectively implemented within the business. This includes the responsibility of overseeing client funds and share register reconciliations related to transactions on the Secondary Market.
The COO will conduct a formal review of this policy annually and will submit their recommendations and any amendments to the Board of Tressel for approval. The Board will review the proposed amendments and recommendations made by the COO and will make any further amendments and recommendations that it deems appropriate. The Board will approve the amendments made to this policy if, in its view, the policy and the amendments achieve, the purpose of this policy.
The COO will ensure that all records in relation to the implementation of this policy are properly kept.
3. Key Measures
Price Bands
A key tool to manage the risk of market manipulation is the implementation of upper and lower price band limits for transactions to highlight larger price fluctuations. For example, display a warning if the listed price exceeds a certain percentage of the last traded price.
Information
To encourage transactions at fair market prices and discourage or restrict orders which may lead to price manipulation, we will provide links to online market housing value data for guidance. This information will serve as a reference for investors, transparent and independent information on property values to guide informed decision-making.
Trading Halts
In the unlikely event that there is unusual activity or significant price movements in a single PropertyCo, we may implement a share trading halt for that PropertyCo. This measure will only be used in extreme circumstances to protect the integrity of the market. However, with the implementation of pricing bands designed to regulate price fluctuations, the likelihood of such a halt being necessary is minimal.
Best Price Policy
We determine the priority of orders as follow:
- Time Priority: Among orders at the same price, the order entered first is executed first (first-come, first-served).
- Price Priority: Orders with the best price (highest bid, lowest offer) are executed first.
- Size Priority: Orders at the same price and time, larger orders will not be executed first.
Time priority will be used.
Transparency
To ensure all transactions and orders are transparent, relevant historical data is available to all investors. This can help detect and deter manipulative practices.
Transaction Monitoring
We implement monitoring systems to detect suspicious trading patterns and to flag potential manipulation.
Ongoing Review
We monitor activities and systems to ensure compliance with rules and to identify any potential weaknesses.
4. Setting Trading Bands
Methodology
Residential property values tend to follow property cycles. Information on house values with historical sales data is available via platforms such as OneRoof, houses, trademe, council CV data, and from time-to-time media reporting. This information helps to create general house value expectations and trends given the relatively stable and predictable annual value changes in residential property, as houses are not a typical trading entity.
For the purpose of setting the pricing bands, we assume:
- Annual house growth value expectation: 5-7%
- Monthly growth expectation: approximately 0.4-0.6%
Implementation
Acceptable
No flag will be displayed for Instructions within the following pricing bands:
- Upper limit price band (acceptable): Above last traded price +4%
- Lower limit price band (acceptable): Below last traded price -4%
Flag
A flag/alert will be displayed (and saved) for Instructions within the following price bands:
- Upper limit price band (warning): Above last traded price +5% to 7.4%
- Lower limit price band (warning): Below last traded price -5% to -7.4%
However, there will be no pause/hold on the platform.
Hold or Stop
A flag/alert will be displayed (and saved), and a pause (hold) will be placed on the alerting transaction for Instructions within the following price bands.
- Upper limit price band (warning and hold): Above last traded price +7.5% upwards
- Lower limit price band (warning and hold): Below last traded price -7.5% downwards
- Upper limit price band (stop): Over last calendar month +15% cumulative over the last month
- Lower limit price band (stop): Over last calendar month -15% cumulative over the last month
5. Transaction Monitoring
Purpose
- Identify instances of market manipulation, and other prohibited activities.
- Preserve confidence in the marketplace by deterring unfair trading practices.
- Safeguard investors from unfair trading practices.
- Ensure compliance with Tressel's trading rules (also refer to Tressel Investor Agreement).
Strategy
- Tressel will use the platform technology to monitor trading activity in real-time.
- Monitoring systems to generate alerts based on unusual trading patterns, price movements, or other suspicious activity.
- Tressel will develop large amounts of trading data to identify potential issues.
- Tressel will investigate potential breaches of the rules and our policy.
Records
Our CRM (Sales Force) will capture a detailed record of all orders entered, modified, and executed on the market. This provides Tressel with the data needed to real time monitor the market for manipulative activity.
Red flags
We have a real-time monitoring system in place to detect unusual trading activity and raise red flags automatically based on pre-established criteria (e.g., unusual price volatility, large trade volumes, or patterns indicative of manipulation).
Examples of red flags below:
- Significant increases or decreases in trading volume in a particular PropertyCo that are not explained by normal trading volume or activity.
- Sudden and significant price changes that are not justified by fundamentals.
- Buying and selling the same shares to create artificial trading volume.
- Artificially inflating the price of shares and then selling it for a profit.
- Placing orders with the intention of cancelling them before they are executed to mislead other traders.
- Placing multiple orders at different price levels to create a false impression of market depth.
6. Audits and Compliance Checks
The Compliance Assurance Programme sets out the assurance testing that will be undertaken to assess compliance with the procedures and controls set out in this policy and the adequacy and effectiveness of those procedures. This includes periodic audit of sample transactions.