Understanding “Guaranteed” Market-on-Close
What it is: Guaranteed-market-on-close (GMOC) order is an off-exchange block trade that is tied to the official closing price of an ETF. This trade is initiated by a trading desk and executed with an ETF liquidity provider on behalf of a client.
What it’s not: GMOC is not a market-on-close (MOC) order. An MOC order is routed to the listing exchange and combined with all other MOC orders to be executed in a closing auction on that exchange.
Example of GMOC: Below, an investor implemented a GMOC trade in the Matthews Asia Innovators Active ETF (MINV) with no market impact.
In Figure 1, an ETF liquidity provider trades 10,000 shares on the close at $23.42 (blue arrow). Shortly after the closing price marked “MC”, two identical block prints cross the tape for 105, 139 & 261, 402 shares, which represent the two, separate custodians of the investor (red arrow).
In Figure 2, the yellow circle highlights the price at which the ETF closed and is the same price the two identical GMOC trades were printed. The trades occurred in line with where the ETF had been trading over the final hour of the trading day, with no price impact by the $10mm GMOC trade.