
One-To-Many
One-to-many is a type of trading platform or market where all buyers and sellers transact with just a single market operator. Whereas a typical exchange involves a specialist or primary market maker matching buyers with sellers, a one-to-many platform operator will purchase all assets from sellers and resell them to buyers. One-to-many is a type of trading platform or market where all buyers and sellers transact with just a single market operator. The most infamous example of a one-to-many trading platform was Enron Online (EOL), an unregulated online trading platform for gas and power established in the late 1990s. One-to-many is a market structure where a sole market maker or operator trades against all buyers and sellers in a security.

What Is One-To-Many?
One-to-many is a type of trading platform or market where all buyers and sellers transact with just a single market operator. Whereas a typical exchange involves a specialist or primary market maker matching buyers with sellers, a one-to-many platform operator will purchase all assets from sellers and resell them to buyers. All bids and offers are centralized and posted by the platform or market operator.



Understanding One-To-Many
A one-to-many market involves one group or organization transacting with multiple buyers and sellers. However, in contrast to the standard "many-to-many" platform, one-to-many is rarely used in capital markets. The Commodity Exchange Act, for instance, does not recognize one-to-many markets as official trading facilities.
Many-to-many platforms are a given for most traded assets, such as stocks, bonds, derivatives, commodities, and/or currencies. Multitudes of both sellers and buyers of an asset come together at an exchange, which will charge transaction fees for its service.
For certain markets, a one-to-many platform is more appropriate. For example, the auction market for art. A single work of art, like a one and only Picasso painting, would be put up for auction by Sotheby's or Christie's for many bidders.
However, since an auction house is unlikely to purchase an asset from the owner first in order to remarket it, it will only sell the art if the reserve price is met. The bids, as well as the auction house's offers, are all funneled through the auction house. This is not a perfect example, but it highlights that not all markets connect buyers and sellers directly. With a one-to-many platform, there is an operator or business in the middle.
Example of a One-To-Many Market Place
The most infamous example of a one-to-many trading platform was Enron Online (EOL), an unregulated online trading platform for gas and power established in the late 1990s. Market manipulation, false reporting, and wash trading brought Enron EOL to a rather quick demise.
Enron acted as the counterparty to every transaction that took place on the exchange. This means that Enron's credit was being relied on for every transaction. In a normal market, a clearinghouse guarantees that both sides of the trade get what they are supposed to. In an unregulated or over-the-counter (OTC) market, there is counterparty risk. This type of risk comes from not knowing if the other party can deliver on their side of the trade.
Initially, Enron had a good reputation and credit, but soon cracks started to form. Enron could no longer hold up its end of the trades. Traders transacting with Enron also fled, leaving it without the revenue supply it needed to help support its failing business in other areas.
While the EOL project and Enron failed, it was successful for Enron for a time. The platform handled more than $300 billion in trades in 2000.
Related terms:
Auction House
A company that facilitates the buying and selling of assets, such as works of art and collectibles. read more
Auction
An auction is a sales event where buyers place competitive bids on assets or services. Read the pros and cons of buying and selling through auctions. read more
Bid
A bid is an offer made by an investor, trader, or dealer to buy a security that stipulates the price and the quantity the buyer is willing to purchase. read more
Commodity Exchange Act (CEA)
The Commodity Exchange Act regulates commodities and futures trading in the U.S. It has been in force since 1936. read more
Clearing
Clearing is when an organization acts as an intermediary to reconcile orders between transacting parties. A clearing bank approves checks for payments. read more
Clearinghouse
A clearinghouse or clearing division is an intermediary that validates and finalizes transactions between buyers and sellers in a financial market. read more
Counterparty
A counterparty is the party on the other side of a transaction, as a financial transaction requires at least two parties. read more
Exchange
An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. read more
Make a Market
Make a market is an action whereby a dealer stands by ready, willing, and able to buy or sell a particular security at the quoted bid and ask price. read more
Market Maker
Market makers compete for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. read more