Composite tapes are ticker tapes used to print real-time transaction activity in financial exchanges. They were once the primary means of obtaining information on securities and are still used today, providing a broad picture of global trading activity. Modern technology has provided other ways to access market activity, but composite tapes continue to be used.
Composite tapes are the ticker tapes used to print transaction activity in different types of financial exchanges. Composite tape captures information in real time and continuously prints current activity in a variety of different markets. The use of ticker tape once served as the most immediate way for regional exchanges to obtain information about transactions taking place on national exchanges. Even today, many investors and different exchanges continue to actively use composite tapes as the primary means of obtaining information on the performance of securities.
The use of composite tapes dates back to the early years of stock exchanges and harnessing the new power of electricity. In the early 20th century, it was not unusual for large corporations holding large portfolios to have a machine on the premises to receive composite tape reads. At the same time, ticker tape machines allowed exchanges around the world to receive updates on activity occurring on other exchanges. For several years, the composite tape served as the quickest way to determine current investment conditions without actually being present on the trading floor of an exchange.
The usual structure for information transmitted on a composite tape is to note all transactions involving a given security, regardless of which exchange the transactions are made on. This allows investors to see a broad picture of what is happening with security around the world and get an idea of how trading is affecting the value of shares. In many cases, being able to view this large amount of data collected at the same time allows the investor to make more informed decisions about what to do with the stocks he currently owns.
Modern technology has provided many other ways to access market activity, but composite tape continues to be used on many exchanges and by many investors today. While today’s ticker tape machines are faster and more efficient than in years past, they still tend to work in the same basic way.
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