Cincinnati stock exchange was one of the seven national exchanges in the United States offering equities trading in an auction environment. Unique among these exchanges, the Cincinnati was completely electronic with a geographically-dispersed trading floor.

History

In 1885, a group of Cincinnati businessmen came together to auction the shares of a handful of local companies. Just as their counterparts in Philadelphia, Boston and elsewhere had done, these early traders saw the opportunity to profit from their proximity to certain rapidly-expanding businesses. The Cincinnati Stock Exchange (CSE) flourished along with the U.S. economy and, unlike many other regional exchanges, survived the depression and the war years.

In 1975, amendments to the 1934 Securities and Exchange Act encouraged the utilization of new data processing and communications techniques in the securities industry. The following year, the CSE undertook one of the most significant innovations in the history of auction exchanges, resulting in the replacement of its centralized physical trading floor with an all-new concept: a geographically-dispersed electronic trading floor.

In combination with the introduction of the first competing specialist system, the result was a unique exchange, whose contributions include the automatic execution of customer orders and increased market liquidity. These changes have led to improved customer prices, a fact which has been formally acknowledged in a Securities and Exchange Commission report.

Today, the Exchange is headquartered in Chicago’s financial district, home to many of its members. However, the substitution of a physical trading floor with an electronic network means that all members receive the exact same efficiency and timeliness in quote dissemination, trade execution and trade reporting, regardless of where they are located. Across the street or across the country, the Cincinnati is now everyone’s local exchange.

Innovation

The Exchange has a long list of notable firsts.

* They created the first all-electronic stock exchange in the United States. Through their development of the National Securities Trading System (NSTS) which automatically performs all the functions of an auction market, we became the first exchange to replace its physical trading floor with a geographically dispersed electronic trading floor.

This relieves our members of the unnecessary overhead expense and inefficiency associated with a traditional exchange floor operation, and allows them to efficiently and inexpensively interface their exchange activity with their back office operations. This trading model, created and introduced by the CSE, has attracted the attention of the industry, and has been adopted by exchanges in both Canada and Europe.

* Cincinnati was also the first exchange to "open" its specialist book for all members to see, and we introduced what is still the only automated exchange interface with the Intermarket Trading system (ITS). The automated ITS interface allows CSE members to interact electronically with all other stock exchanges in order to obtain the best possible execution price for themselves and their customers.

* The introduction of a competing specialist system was another first for the CSE. We designed this system so that, in conjunction with our electronic floor environment, we can provide our members with the most effective means of interacting with their customer order flow of any exchange in the United States.