CATS (Computer Assisted Trading System) was an automated exchange system developed by the
Toronto Stock Exchange
The Toronto Stock Exchange (TSX; french: Bourse de Toronto) is a stock exchange located in Toronto, Ontario, Canada. It is the 10th largest exchange in the world and the third largest in North America based on market capitalization. Based in the ...
. It went live on November 18, 1977, with 90 stocks.
CATS was introduced, piloted and developed by Harold B. Hofmann, then the Vice President of Operations at the Toronto Stock Exchange. CATS was one of the first technologies allowing for a full automation of the price-setting process in a stock exchange. This technology was implemented in several other stock exchanges in the 1980s. In some cases, it was used as an assistance to
open-outcry, but in others it allowed for a full dismantlement of the open-outcry institution. The
Paris Bourse
Euronext Paris is France's securities market, formerly known as the Paris Bourse, which merged with the Amsterdam, Lisbon, and Brussels exchanges in September 2000 to form Euronext NV. As of 2022, the 795 companies listed had a combined market ...
purchased this system in the early 1980s and implemented it as CAC (
Cotation Assistée en Continu).
CATS handled the process of
order matching and price setting through a "
double auction"
algorithm
In mathematics and computer science, an algorithm () is a finite sequence of rigorous instructions, typically used to solve a class of specific problems or to perform a computation. Algorithms are used as specifications for performing ...
. It is credited for having been the first system to allow for a full
automation
Automation describes a wide range of technologies that reduce human intervention in processes, namely by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machines ...
of the price setting process in a centralized, order-driven stock market.
Notes
References
*Domowitz, I. 1990 "The Mechanics of Automated Trade Execution Systems", ''Journal of Financial Intermediation'' 1(2): 167-194.
*Domowitz, I. and Wang, J. 1994 "Auctions as Algorithms: Computerized Trade Execution and Price Discovery", ''Journal of Economic Dynamics and Control'' 18(1): 29-60.
{{DEFAULTSORT:Cats (Trading System)
Stock exchanges in Canada
Former electronic trading platforms
1977 software
Online auction tools