Behind the scenes: Sharesies’ process for NZ investments
Step 1: You place an order 💖
Step 2: Your order goes through Sharesies Market Service ✅
Sharesies Market Service is the system that connects us to the NZX. It’s also the system that decides if your order will ‘go to market’ or not.
When we receive your order, Sharesies Market Service asks a couple questions:
Is the NZX accepting orders? The NZX is ‘the market’ where buyers and sellers come together. We can only send orders to the market between 8:30 AM and 4:45 PM Monday to Friday. Sharesies participates in the pre-open phase between 8:30 AM and 10 AM NZT on trading days—during this time, orders for NZX-listed shares will be placed on the market, but your order won’t fill until it matches with a buyer or seller when the market opens at 10 AM.
Does a human need to have a look? We might need to take a closer look at your order for a number of reasons, and decide if it’s good to go to market.
If an order is waiting to be placed on market, it’ll show as ‘pending’—you can usually cancel a pending order.
Step 3: Your order goes on market—woohoo! 🎉
Sharesies Market Service uses an algorithm to try and get you the best available price for your order in line with our best price policy. This is also known as ‘price discovery’.
Price discovery involves looking at things like the last traded price, market conditions, and availability of buyers or sellers—and then making adjustments until we find a price to trade at within a limit that we set. Orders placed through Sharesies are automated, so your order fills as quickly as possible. A Sharesies dealer will only intervene if your order needs a helping hand.
Sometimes, we can complete your order in a single trade, straight away. Market and limit orders might also be sent to market with similar orders placed by other investors—this is called ‘aggregation’. When orders are aggregated, they retain their priority. If an aggregated order only partially fills, and your order was placed first, this means it’ll be filled first.
Orders, or partial orders that are waiting to be filled are called ‘processing orders’. If an order remains unfulfilled for 30 days, we’ll cancel the unfulfilled parts of the order and return the money back into your Sharesies Wallet, where you can place another order if you wish.
Step 4: Your order appears in Sharesies 🍍
When your order is filled (either partially or fully), you’ll see your investments (if you’re buying) or money (if you’re selling) appear in Sharesies. You’ll also be able to see a contract note that gives you all the info you need to know about your order and the trade that took place. In some cases, this will happen as soon as you place your order.
Step 5: Your order goes to the NZX Clearing House 💸
Your order’s completed and your Portfolio is updated. Awesome!
Meanwhile, Sharesies has an obligation to settle your trades with the NZX Clearing House. The NZX Clearing House sits between Sharesies and the buyer or seller on the other side of your trade. It’s responsible for making sure that all trades happen, and manages the risk of having heaps of different people trading with each other.
When we settle your buy order, we give the Clearing House your cash to pay for the order, and the seller on the other side gives the Clearing House the shares. When the Clearing House has the cash and the shares, they pass them on to the buyer and seller. This usually happens 2 working days after the order (or part of the order) has been completed—also known as T+2 settlement.
This is an entirely behind the scenes process that you don’t need to worry about.
What else happens behind the scenes?
As you can see, getting investments into your Portfolio involves lots of moving parts. And those moving parts are different for each type of investment. If you’re curious about how the process differs, check out our other behind the scenes articles:
Get in touch at firstname.lastname@example.org if there’s anything else you’d like to know more about!
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.