What are Microexchanges?

Electronic marketplaces which bring together buyers and sellers of niche products through an IT-based platform.

Where have you heard about Microexchanges?

Although most commonly found in commodity markets, microexchanges are also used for equity trading. Examples include the Aruba Electronic Stock Exchange.

What you need to know about Microexchanges.

The term was first used by Patrick L Young in 2000 to describe an internet enabled marketplace. By using a technology platform it’s possible for microexchanges to deliver similar services to larger, conventional exchanges but with fewer staff. This can give a more efficient platform with lower costs and higher returns.

The three characteristics of a microexchange are:

1. A modest secretariat of up to a dozen people
2. A niche product, which is too small to be profitable for large exchange
3. Trading carried out via the internet.

The main barrier to microexchanges is the cost of regulatory compliance.

Find out more about Microexchanges.

Microexchanges are most common in the commodity markets. Read our definition to find out more about trading on commodity markets.