Why Anonymous?https://www.pinnacledigest.com/blog/schiffknowsbest/anonymous-messing-your-stock
Anonymous....Anon....House 001....All refer to someone who does not want you to know which broker/house is buying or selling.
Your average retail investor does not use anonymous, as it's typically for advisers or professional traders who have a larger following. You can check with your broker to see if they can do it for you.
The most common use for anonymous is when a broker or individual wants to unload a large position, or part of a position, without investors knowing who is doing the selling. For example, if we knew that a private placement was just done by Northern Securities, and then we start seeing Northern Securities selling, this would be viewed as the smart money selling and could cause others to follow suit. By Northern Securities selling under anonymous, it makes it a little less obvious on who is doing the selling. The main reason why anonymous selling is allowed by the TSX and TSXV is to try and reduce the impact on the pricing. It is up for debate on whether that is the result or not.
Other uses for anon are....
--> To accrue a position discretely.
--> To spook people by selling via anonymous to make a stock look more bearish than it actually is.
--> To make a stock look artificially strong by accruing a position via anonymous.
--> To use it on one end of a trade between the same house. For example RBC buying, and RBC selling, but disguising the sell as anonymous. This can artificially push a stock higher or lower but the net change to the broker/house is zero. This disguises who is on the selling end.
Something to keep in mind is that even if an insider goes under anonymous, the trade is still reported to the exchange and you can view the insider transaction at the end of the day, or via Canadian insider a couple days later.
Looking to see what anonymous is doing is one of my top 5 things to look into when thinking about buying a stock. If I see anonymous selling it for more than 20% of the average volume I typically won't touch it.
Conclusion
Anonymous selling or buying is something to consider as part of your DD. Try to figure out whether it's someone trying to hide their identity, or someone trying to play games. This is one of many tools that can be used when doing your DD.
https://sydney.edu.au/business/research/completed_phd_theses/finance/an_empirical_analysis_of_anonymous_trading_in_equity_markets
The second essay examines how different market conditions and trading needs affect traders' decisions to trade anonymously. This analysis uses data from the Toronto Stock Exchange (TSX), an electronic exchange where identity disclosure is voluntary. The results show that most trading on the TSX remains non-anonymous, as various factors other than anonymity - such liquidity, information asymmetry, the time of day and expected execution costs - are also important considerations in traders' identity disclosure choices. The results suggest that informed traders are likely to use anonymous orders as part of their stealth trading strategies, in order to reduce their overall price impact costs. Anonymously-initiated trades are generally more informative about short-term price movements and, after controlling for selectivity bias, also have lower execution costs than trades initiated non-anonymously. The third essay reports the results of empirical tests that examine, using TSX data, whether anonymity facilitates abuses of client priority rules by allowing proprietarytraders to conceal frontrunning activity. Contrary to investor perceptions, there is no evidence that anonymous orders are commonly used to conceal frontrunning. The potential frontrunning identified by the frontrunning detection models in this essay is limited to only a small number of brokers, and generally more likely to be conducted non-anonymously. In the instances where systematic trading ahead of clients does occur, there is evidence of a positive association between the magnitude and frequency of frontrunning with broker size, order size and informed (profitable) client orders. There is also evidence of some asymmetry in the frequency and volume of frontrunning ahead of buy- and sell-side orders.
These results have implications for market participants seeking to better understand how anonymity can be used to reduce overall execution costs. They are also useful to market operators and regulators interested in assessing the effects of anonymous trading on liquidity and market integrity. Finally, compliance officers and market regulators may find the results informative in terms of assessing how anonymous trading affects traders? best execution and client priority obligations.