Latin American Capital Markets

182 RUBEN LEEfrom the sale of the CQS information is divided proportionally among the differentexchanges according to their relative annual shares.The annual share of an exchangefor any calendar year is essentially the total number of last-sale prices of the network'seligible securities reported by the participant divided by the total number of reportedlast sales.The CTA was established to consolidate the last-sale reporting of all tradesin exchange-listed securities. 33 Trade reports by participants must be made promptlyso that, under normal conditions, not less than 90 percent of such prices must be reportedwithin one and a half minutes. A committee similar to the one running theCQS undertakes the administration of the CTA.There has been much controversy about the merits of consolidating priceand quote information in the United States. 34 The proponents of mandatory priceand quote transparency believe, in essence, that it promotes almost all the key goalsthat regulation of the securities markets should seek to deliver. The goals include investorprotection, fairness, competition, market efficiency, liquidity, market integrity,and investor confidence. The proponents therefore argue that mandatory price andquote transparency should be a fundamental and universal cornerstone of the regulationof exchanges and markets. Others have argued, in contrast, that such a policymay be inappropriate in that it does not recognize that there may be a significanttrade-off in the attainment of different regulatory goals. In particular, they claim thatmandatory transparency can compromise the delivery of the two key goals of efficiencyand liquidity. Private incentives as opposed to regulatory fiat are thought bestto lead to the level of transparency that most effectively delivers these goals. Morepractically, each exchange has a strong incentive to publish appropriate amounts of informationabout prices and quotes, and data vendors have a strong incentive to consolidateby themselves all relevant information about such prices and quotes.A further lesson of the American experience for regional attempts at consolidatingprice and quote information is that it is an extremely political exercise thattakes a long time to realize.Order RoutingOrder routing is the act of delivering orders from their originators, such as investorsand financial intermediaries, to an order execution mechanism or trading system.Hand, cart, telephone, telex, fax, Internet, and other information distribution mecha-33 See CTA (12/1995). It started operating on April 30, 1976.34 This paragraph is drawn from the discussion in Lee (1999, pp. 255-71).Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub