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INTERMARKET TRADING SYSTEM
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/TS-Rapidly Expanding In Competitive
Issues
The six participating market centers have increased
the number of issues traded on the system from the
original 11 in April 1978 to almost 640 currently. This
growth will continue as approximately 40 issues per
month are added to include the full 900 to 1,000
issues now competitively traded between two or
more participants in the system.
Growth in ITS Issues
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600
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1978
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ITS-Over A Million Shares A Day
And Growing
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The securities industry's confidence in ITS is reflected
by the ever-increasing use of the system. In August
1978 six exchanges were linked by ITS and, in that
month, trading volume reached 5.7 million shares.
Twelve months later, monthly volume had grown to
22 million shares. The daily average ITS trading day is
now just over one million shares and growing.
In the same twelve months, the number of ITS trades
per month rose from 8,000 to 37,000 and the system
is still growing.
When relating these figures to the much larger
number of shares traded overall, it is important to bear
in mind that ITS normally is used only when it appears
that a better price is currently available in a competing
market center. When prices are equal, a broker or
market-maker will usually execute in the market in
which he is physically present. The purpose of the
system is not to shift trades at random from one
market to another but assure that executions can take
place at the best price currently available within the
nationally linked network.
Monthly ITS Trades and Volume
AUG 79
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JAN 79
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AUG 78
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AUG 78
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ITS-Links T h e National M a r k e t System
Elements
ITS provides brokers and market- makers with an
electronic communications link for transmitting buy 4
sell commitments as well as administrative messagq
to participating exchanges. Each commitment and
message is verified by hard copy delivered within
seconds of the transmission. ITS works in concert
with each of the other NMS elements:
The Consolidated Tape-- Trades in ITS are reporte
on the Consolidated Tape by each participant.
National Clearance and Settlement-- No additior
clearing steps by brokers are required for ITS trades.
Each broker throughout the country completes the
post trading process through his own local clearing
entity.
The Composite Quote System--Adjunct to ITS ar
an important factor in its success. It enables all
interested parties to see the current quote and size ¢
each eligible stock in all participating markets
nationwide.
Limit Order Protection-- ITS offers greater
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protection of public limit orders "at the market" than
presently available. Plans for protection of limit order:
"away from the market" are currently being
developed.
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ITS-A Dynamic, Expanding System
Because of the prudent, evolutionary design of ITS,
many enchancements based on experience have
been made during the past year. More are planned
the future. Those include:
A Universal Template-- For greater efficiency,
standardized display format for CRT screens will
simplifyentry and responses to commitments as
well as reduce turnaround time.
increased Message Capability-- Software
enhancement will provide ability for ITS expansio
and increased traffic capacity in the 1980's.
Names Later Capability-- For active issues, "g
up" names on ITS trades may be supplied later in
the trading day to provide faster executions.
increased Availability of Quotation Montages
More aid for brokers to view additional size at a b~
price when available in other market centers.
Commitment Card Input and Response
Capability--A pilot program to provide ITS
capability for direct input and response via "marksense cards" rather than keyboard strokes. This i:
improve system efficiency and speed.
Limit Order Protection - - A new Limit Order
Information System (LOIS) will build upon ITS in
order to provide protection for limit orders "away
from the market".
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ITS-The Cornerstone Of The National
Market System
The IntermarketTrading System:
stimulates stronger professional competition to
handle public investors' orders.
improves depth and liquidity in the public markets
for listed stocks.
preserves the key element of human judgment in
pricing and trading listed stocks while facilitating the
execution of transactions among widely separated
marketplaces.
assures low-cost enhancement of market-making in
participating market centers.
permits continuity of regulation and surveillance of
market activity in listed stocks.
avoids the inflexibility that would result from forcing
all trading into a single, computerized mold.
By building upon, refining and enhancing the timetested fundamental features of our exchange
marketplaces, ITS allows all members in all
participating markets to better serve their customers.
Better service to the investing public, through a
system that employs highly sophisticated electronic
technology but at the same time is simple, practical
and inexpensive, makes ITS the cornerstone of the
emerging National Market System.
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For further information or if you have any questions about the
Intermarket Trading System, please contact:
American Stock Exchange
James Neal
Market Operations Division
86 Trinity Place
New York, NY 10006
(212) 938-6386
Boston Stock Exchange
Leon J. Bastien
Marketing Department
53 State Street
Boston. MA 02109
(617) 723-9500
Midwest Stock Exchange
Michael Gasped
Exchange Operations
120 South LaSalle Street
Chicago, IL 60603
(312) 368-2404
New YorkStock Exchange
Edmund Lukas
Marketing Department
20 Broad Street
New York, NY 10005
(212) 623-6876
Pacific Stock Exchange
Howard E. Stubblefield
Marketing Department
301 Pine Street
San Francisco, CA 94104
(415) 393-4044
Philadelphia Stock Exchange
Stephen Reed
Marketing Department
17th .& Stock Exchange Place
Philadelphia, PA 19103
(215) 563-4700
INTERMARKET TRADING SYSTEM ,
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The Intermarket Trading SystemBuilding On Strength
The Intermarket Trading System (ITS) was launched in
April 1978 as a joint effort of the American, Boston,
Midwest, New York, Pacific and Philadelphia Stock
Exchanges. Since its inception, ITS has proven itself to
be an efficient electronic communications linkage
between market centers as called for by Congress in
its mandate for a National Market System. But
electronic efficiency was not the only consideration in
developing ITS. Equally important was the
determination to build upon the proven strengths and
flexibilities of the exchange market systems while
expanding the full and fair field of competition among
investors' orders, among market- makers and
among the market centers.
The result is a system that weds computer age
technology with human judgment-- a factor vital to
the pricing and trading of securities for almost 200
years. Melding these two elements permits more
effective and competitive utilization of capital for
market making and facilitates the execution of
investors' orders at the best price available.
In short, ITS enables a broker or market- maker to
reach into other markets m electronically-- within a
matter of seconds, whenever a better price in a
competitively traded issue may be available.
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