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Mechanisms Target


The exchange mechanism involves the microstructure of trading market, and different trading markets may have different exchange mechanisms. The main objectives of the exchange mechanism of Pacific International Stock Exchange include:

1. Liquidity
The liquidity of traded products is the condition for the survival of market. If the market lacks of liquidity or fails to provide sufficient liquidity, the function of the market will be affected. On the positive side, the product liquidity lays a foundation for the effective allocation of resources. The market liquidity includes two aspects of requirements, namely, transaction speed and transaction price. If the investor can reach a deal with rational price rapidly, then the market liquidity performs well. On the contrary, the merely fast speed in transaction cannot indicate good liquidity completely. Therefore, Pacific International Stock Exchange regards the product liquidity as the basic service objective.

2. Stability
The stability of market indicates the fluctuation degree of price. Generally speaking, the market with good stability has low fluctuation in price or strong ability to adjust the balance. In terms of the healthy operation of market, it is necessary to maintain the relative stability of price and prevent significant fluctuation. The stability of market can be measured by the risk degree of market index. As various kinds of information are the key factors to affect product price, improving market transparency is an important measure to enhance market stability. The transparency principle has always been the cornerstone for Pacific International Stock Exchange to maintain market stability.

3. Effectiveness
Effectiveness of trading market: [1] high efficiency of market; and [2] low cost of market. First is the information efficiency of market, which means that the product price can reflect various kinds of information correctly, rapidly and completely. Second is the operation efficiency of market, which means the operational capability of trading system hardware, such as the processing speed and capacity of trading system. The low cost includes direct cost (commissions and taxes paid for the transaction) and indirect cost (expenses incurred by the collection of information). High-quality information service but low-cost transaction are the goals that Pacific International Stock Exchange keeps pursuing.