The liquidity of a company’s shares is determined by the available quantity, indications of interest, and spread, i.e. the difference between bid price and selling price. In practice, the liquidity guarantee means that a member of the exchange acts as the guarantor for there being bid prices and selling prices, a guaranteed quantity of shares available, as well as ensuring that that the discrepancy does not become too great between bid price and selling price. This is of importance to investors, since a smaller spread significantly affects the transaction cost.
Liquidity guarantee is common in today’s markets and is currently used by more than 150 companies in the Swedish market. Liquidity guarantees ensure that the interests of both present and future shareholders of listed companies are safeguarded. NGM has adapted its business model to work well for both major investors as well as retail investors by providing information about trade flows as well as freely available information about current bid and selling prices in real time on our website.