The Consolidated Tape System ( CTS ) is the United States electronic service, introduced in April 1976, that provides last sale and trade data for issues admitted to dealings on the American Stock Exchange , New York Stock Exchange , and U.S. regional stock exchanges .
31-743: The Consolidated Tape Association (CTA) is the operating authority for both the Consolidated Quotation System (CQS) and the Consolidated Tape System (CTS). EuroCTP is a joint venture established in 2023 by 14 bourses, which aims to provide a consolidated tape (CT) in financial trading within the EU. This forms part of the European Commission 's Capital Markets Union . In July 2023, the UK's Financial Conduct Authority (FCA) announced it
62-632: A central bank , such as the US Federal Reserve bank , and raising additional capital. In a worst-case scenario, depositors may demand their funds when the bank is unable to generate adequate cash without incurring substantial financial losses. In severe cases, this may result in a bank run . Banks can generally maintain as much liquidity as desired because bank deposits are insured by governments in most developed countries. A lack of liquidity can be remedied by raising deposit rates and effectively marketing deposit products. However, an important measure of
93-459: A bank's value and success is the cost of liquidity. A bank can attract significant liquid funds. Lower costs generate stronger profits, more stability, and more confidence among depositors, investors, and regulators. The market liquidity of stock depends on whether it is listed on an exchange and the level of buyer interest. The bid/ask spread is one indicator of a stock's liquidity. For liquid stocks, such as Microsoft or General Electric ,
124-411: A daily process requiring bankers to monitor and project cash flows to ensure adequate liquidity is maintained. Maintaining a balance between short-term assets and short-term liabilities is critical. For an individual bank, clients' deposits are its primary liabilities (in the sense that the bank is meant to give back all client deposits on demand), whereas reserves and loans are its primary assets (in
155-474: A data recipient has experienced data loss in receiving the information (e.g., due to a system problem at the receiving site) an automated retransmission facility is available to allow that data recipient to automatically request and receive message retransmissions. Market liquidity In business , economics or investment , market liquidity is a market's feature whereby an individual or firm can quickly purchase or sell an asset without causing
186-430: A drastic change in the asset's price. Liquidity involves the trade-off between the price at which an asset can be sold, and how quickly it can be sold. In a liquid market, the trade-off is mild: one can sell quickly without having to accept a significantly lower price. In a relatively illiquid market, an asset must be discounted in order to sell quickly. A liquid asset is an asset which can be converted into cash within
217-403: A drastic price reduction, and sometimes not at any price) due to uncertainty about its value or the lack of a market in which it is regularly traded. The mortgage-related assets which resulted in the subprime mortgage crisis are examples of illiquid assets, as their value was not readily determinable despite being secured by real property. Before the crisis, they had moderate liquidity because it
248-506: A master database by symbol. CTS maintains in its database, by symbol, a consolidated high, low, last price and volume; and for each market center that trades that symbol, the market’s last sale and volume information. This information is updated with each trade. Market centers are required, as authorizing self-regulatory organizations (SROs) per the CTA Plan, to report their trade activity within 90 seconds of execution time to CTS; otherwise
279-433: A relatively short period of time, or cash itself, which can be considered the most liquid asset because it can be exchanged for goods and services instantly at face value. A liquid asset has some or all of the following features: it can be sold rapidly, with minimal loss of value, anytime within market hours. The essential characteristic of a liquid market is that there are always ready and willing buyers and sellers. It
310-726: Is currently chaired by Emily Kasparov of the Chicago Stock Exchange, the first woman and the youngest chair elected to the position. CTA manages two Plans to govern the collection, processing and dissemination of trade and quote data: the Consolidated Tape Plan , which governs trades, and the Consolidated Quotation Plan , which governs quotes. The Plans were filed with and approved by the Securities and Exchange Commission (SEC) in accordance with Section 11A of
341-423: Is similar to, but distinct from, market depth , which relates to the trade-off between quantity being sold and the price it can be sold for, rather than the liquidity trade-off between speed of sale and the price it can be sold for. A market may be considered both deep and liquid if there are ready and willing buyers and sellers in large quantities. An illiquid asset is an asset which is not readily salable (without
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#1732869506165372-600: Is the Administrator of Network A, which includes NYSE-listed securities, and the American Stock Exchange is the Administrator of Network B, which includes AMEX-listed securities. CTS and CQS receive trade and quote information, respectively from NYSE, AMEX, and the other regional market centers using a standard message format. Each system validates its respective message format, verifies the information against its databases (e.g., valid symbol , etc.), consolidates
403-595: The Securities Exchange Act of 1934 . Since the late 1970s, all SEC-registered exchanges and market centers that trade NYSE or AMEX-listed securities send their trades and quotes to a central consolidator where the Consolidated Tape System (CTS) and Consolidated Quotation System (CQS) data streams are produced and distributed worldwide. The CTA is the operating authority for CQS and CTS. The current Participants include: The New York Stock Exchange
434-536: The normal course of business . Contingent liquidity risk is the risk associated with finding additional funds or replacing maturing liabilities under potential, future-stressed market conditions. When a central bank tries to influence the liquidity ( supply ) of money, this process is known as open market operations . The market liquidity of assets affects their prices and expected returns. Theory and empirical evidence suggest that investors require higher return on assets with lower market liquidity to compensate them for
465-537: The surviving site at reduced capacity. CTS and CQS receive their data from the market centers over network-based TCP/IP connections. Each market center has redundant communication paths into the two operating environments and each uses diverse common telephone carriers to send its trade and quote data to the Securities Industry Automation Corporation (SIAC). SIAC simultaneously distributes, via IP multicast, trade and quote information to
496-608: The BBO calculations. Both the CTS and the CQS systems are operated on fault tolerant computer platforms at different physical computer sites; CTS is operated at CTA’s complex in Brooklyn ; CQS is operated at CTA’s complex in lower Manhattan , thereby providing redundancy in the event of a site disaster. If a site disaster should occur at either location, all of the computer processing would be transferred to
527-632: The CT for bonds. This article about stock exchanges is a stub . You can help Misplaced Pages by expanding it . Consolidated Tape Association The Consolidated Tape Association ( CTA ) oversees the Securities Information Processor that disseminates real-time trade and quote information ( market data ) in New York Stock Exchange (NYSE) and American Stock Exchange (AMEX) listed securities ( stocks and bonds ). It
558-459: The CTS and CQS subscribers from both sites. Independent of where the system is physically located (i.e., in lower Manhattan or in Brooklyn), both streams of data are simultaneously distributed out of both sites using an SIAC-developed Multicast Packet Replicator (MPR) thus providing "live" redundant streams to data recipients. The use of IP multicast, introduced to the market data industry in 1997,
589-417: The asset's own liquidity to shocks in market liquidity and the effect of market return on the asset's own liquidity. Here too, the higher the liquidity risk, the higher the expected return on the asset or the lower is its price. One example of this is a comparison of assets with and without a liquid secondary market. The liquidity discount is the reduced promised yield or expected return for such assets, like
620-431: The capital needed to facilitate the liquidity. The risk of illiquidity does not apply only to individual investments: whole portfolios are subject to market risk. Financial institutions and asset managers that oversee portfolios are subject to what is called "structural" and "contingent" liquidity risk . Structural liquidity risk, sometimes called funding liquidity risk, is the risk associated with funding asset portfolios in
651-620: The difference between newly issued U.S. Treasury bonds compared to off the run treasuries with the same term to maturity. Initial buyers know that other investors are less willing to buy off-the-run treasuries, so the newly issued bonds have a higher price (and hence lower yield). In the futures markets , there is no assurance that a liquid market may exist for offsetting a commodity contract at all times. Some future contracts and specific delivery months tend to have increasingly more trading activity and have higher liquidity than others. The most useful indicators of liquidity for these contracts are
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#1732869506165682-400: The higher cost of trading these assets. That is, for an asset with given cash flow, the higher its market liquidity, the higher its price and the lower is its expected return. In addition, risk-averse investors require higher expected return if the asset's market-liquidity risk is greater. This risk involves the exposure of the asset return to shocks in overall market liquidity, the exposure of
713-478: The information with the other market centers' information, and disseminates the information to the data recipients in its respective common standard message format via the IP multicast network. Included in every trade and quote message is a timestamp which represents the time that the message is disseminated. Every trade and quote is stored in the system for both on-line and after hours processing. Each system maintains
744-577: The quote is a NASDAQ market maker quote, CQS also calculates a NASDAQ BBO. CQS disseminates the Market center's root quote with an appendage that includes the National and NASDAQ BBOs. In the event that a market center is experiencing technical difficulties in providing quote information, CQS also has a facility that, at the direction of the market center, disseminates zero quotes in its securities thus eliminating any stale quotes and taking that market center out of
775-419: The revised trade report along with the updated consolidated and market center information that is maintained in the database. CTS also disseminates at End of Day , closing messages that provide summary information from its database for each listed stock. For every quote message received from a market center, CQS calculates a National Best Bid and Offer (NBBO) based on a price, size and time priority scheme. If
806-409: The sense that these loans are owed to the bank, not by the bank). The investment portfolio represents a smaller portion of assets, and serves as the primary source of liquidity. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand. Banks have several additional options for generating liquidity, such as selling loans, borrowing from other banks , borrowing from
837-455: The trade report must be designated as a late report. It is the responsibility of the SRO to determine when a trade is late. Late trades do not impact the national last sale price. CTS provides an automated correction processing capability in the event that a market center incorrectly reported its information. When a market center issues a correction message, CTS processes the correction and disseminates
868-399: The trading volume and open interest . There is also dark liquidity , referring to transactions that occur off-exchange and are therefore not visible to investors until after the transaction is complete. It does not contribute to public price discovery . In banking, liquidity is the ability to meet obligations when they come due without incurring unacceptable losses. Managing liquidity is
899-479: Was believed that their value was generally known. Speculators and market makers are key contributors to the liquidity of a market or asset. Speculators are individuals or institutions that seek to profit from anticipated increases or decreases in a particular market price. Market makers seek to profit by charging for the immediacy of execution: either implicitly by earning a bid/ask spread or explicitly by charging execution commissions. By doing this, they provide
930-446: Was setting up a 'consolidated tape' system for City traders. As well as cutting costs and improving the quality of data, the FCA said the reforms would “increase transparency and access to trading data”. The consolidated tape system is to be set up initially for the UK's bonds market followed by equities . A competitive tender process is to be opened up that would see a single firm providing
961-501: Was the first widespread implementation of such technology. SIAC's design and implementation of this technology has been recognized and accepted into the permanent archives of the Smithsonian Institution . This technology allows trade and quote data to be distributed in a broadcast mode over a network and eliminates any dependency where one data recipient having a problem might impact another data recipient. In situations where