Minimum Marketable Parcel (MMP)
The ASX enforces minimum orders for all first-time purchases of a stock. Learn more about the regulations here.
When trading with a CHESS-sponsored platform and having your own HIN, there are certain order size regulations under the ASX operating rules procedures.
All opening buys are subject to a A$500 minimum order as determined by the ASX. This is known as the “minimum marketable parcel”. Once a position has been opened, investors can buy or sell any quantity of the stock.
What is the minimum marketable parcel (MMP)?
The minimum marketable parcel is a rule defined by the Australian Securities Exchange where investors must purchase a minimum shareholding of $500 when buying shares in a new stock or exchange-traded fund.
Any additional purchases that an investor wants to make in the same secuirty must have a minimum order value of $20.
The $500 or $20 minimum does not include brokerage fees.
Example of a first time share purchase
Let's go through an example of purchasing a share for the first time with MMP and a subsequent purchase of the same share.
First time buy order for $BHP
On the Stake platform you will need a minimum of $500 + $3 brokerage to purchase your first shares in $BHP. Orders are rounded to the nearest share so you may need additional purchasing power in your account.
$500.00 + $3 brokerage = $503.00
$503.00 x at market ($46.50) = 10 shares*
10 shares* x at market ($46.50) = $465.
*$ amount orders are rounded down to the nearest share.
Since the amount of $500 cannot purchase a round number of shares, the order must be increased to a total of 11 shares of $BHP.
11 shares x at market ($46.50) + $3 brokerage = $514.50
To make a first time purchase of $BHP, investors would need $514.50 in their account.
Second purchase of $BHP
Now that the investor already holds BHP in their account, there is no $500 minimum order value, instead, it drops to a minimum of $20.
Using the same price above if the investor wanted to buy another share of $BHP.
1 share x at market ($46.50) + $3 brokerage = $49.50
The investor would now own 12 shares in their account.
Why do some platforms let you buy under the $500 minimum order value?
The MMP applies to all CHESS-sponsored trades. If you have an account with another platform that does not require an initial $500 minimum order for each security, they may be operating on a Custodial model, where all your shares are linked to the broker’s HIN.
