vwap calculation - finance facility fee - good luck, page-17

Hi DP,

It was a little perculiar/suspicious, not only did they sell it down from 64.5 to 61 on the crossover but also about 5 minutes before the crossover there was a similar trade which knocked the price down from 64.5 (where it had been trading comfortably for some time having hit 65.5) to 61. Following that a small buy order bought shares at 64 and pushed the last traded price back up to 64 pre-crossover, and then as you noted during the crossover someone offered about 23000 shares at 61 which is where it closed.

There are several common reasons this can occur.

1) computer trading which sells small parcels and just follows a formula and sometimes these strange things happen whereas if a manual operator was running the order they would probably stick with the trading momentum and less of the anomalies happen.

2) a last minute order comes in over the phone and the only way to be sure it gets executed it is to hit the bid regardless of what the last price was.

3) an stock broker has operated an order over the course of the day and has a balance left which they sell at whatever the bid is just to get the whole order finished. The average sale price for the order may not be overly effected thanks to the averaging effect.

4) an stock broker who has been given a line of stock to sell over the day and has ended up selling at let's say 62.45c average sometimes would prefer to be able to report back the sale to the client (often institutional or overseas clients that offer recurring business to the better operators) at the end of day while being able to show a closing price which is at or below the average they received for the whole line of stock. something like " I sold 220,000 SFX shares as instructed at an average price of 62.45c and the last traded price was 61 (rather than saying the last traded price was 64).

5) It could well be that some party has an interest in keeping the closing price low. Effecting the last traded price is unlikely to be of benefit when looking at the vwap for the day, however it could help stem an upward trend and help keep the vwap for the next day lower. If a party had an interest in keeping the swap low and lets say 64.5 represented a breakout on the charts which often work on last traded, then todays closing action would help. Or, if a takeover were to land tonight then it would definitely have served a purpose because in a take over announcement the suitor is always very keen to announce what premium the offer is at relative to the last traded price before the offer was made. Of course all of this would be highly unethical and illegal.

Hope this helps