What Is the Madrid Stock Exchange Computer Assisted Trading System (MSE CATS)?

The term Madrid Stock Exchange Computer Assisted Trading System (MSE CATS) refers to an electronic trading platform that was used by the Madrid Stock Exchange. The system, which was based on the Toronto Computer Assisted Trading System, was adopted in 1989. As the world's first fully electronic trading system, CATS allowed Spanish markets to operate on a continuous basis. The use of the CATS was phased out by 1995 and was replaced by a more modern system known as the Sistema de Interconexión Bursátil Español.

Key Takeaways

  • The Madrid Stock Exchange Computer Assisted Trading System was an electronic trading platform that operated in Madrid between 1989 and 1995.
  • The system was based on the CATS system originally developed and implemented by the Toronto Stock Exchange.
  • MSE CATS helped increase the efficiency and transparency of the stock market.
  • It provided traders with order fulfillment, price quotation, trade confirmations, and record-keeping.
  • The MSE CATS was phased out in 1995 and replaced by the Sistema de Interconexión Bursátil Español.

Understanding the Madrid Stock Exchange Computer Assisted Trading System (MSE CATS)

The Madrid Stock Exchange, which is also known as the Bolsa de Madrid, was established in 1809. In 1831, the country passed a law officially creating the exchange. It initially traded securities in banks, railways, iron, and steel companies. The exchange played a key role in shaping the country's economy and experienced a number of milestones, including the establishment of a new settlement system in 1974 and the implementation of a fully electronic system in 1989.

The Madrid Stock Exchange Computer Assisted Trading System (MES CATS) was developed by the Toronto Stock Exchange (TSX). It was launched in 1977 as the world's first fully automated exchange system and the first platform to be adopted by a major stock exchange. Following its adoption in Toronto, other stock exchanges implemented the system throughout the 1980s, including Madrid.

The Spanish market implemented the CATS in 1989. At that time, the MSE underwent significant restructuring. The system increased efficiency and transparency, allowing market participants to see the size and price of each order entered into the market, as well as the identity of the brokers and other market intermediaries placing the orders through the MSE CATS interface. The system searched for and found the best possible pairings of buy and sell orders, in order to provide rapid, transparent, and efficient executions.

In 1995, the system was phased and replaced by Sistema de Interconexión Bursátil Español, which is also known as Sistema de Interconexión Bursátil Español.

The SIBE platform was developed and established by the Madrid Stock Exchange.

Special Considerations

CATS was considered much more efficient than the traditional open outcry system in which human traders would place and pair orders from the physical trading floor upon its inception at the TSX. In addition to its superior speed and accuracy, it also generated trade confirmations for parties on both the buy- and sell-sides. Traders were also able to maintain permanent records within the CATS. In time, this vast trove of historical transaction records would be seen as a valuable source of market data in itself.

History of the Madrid Stock Exchange Computer Assisted Trading System (MSE CATS)

The MSE CATS was initially responsible for facilitating trading in seven large-cap stocks, but this portfolio quickly expanded to 51 stocks by the end of 1989. It was credited for allowing automation of the price-setting process in a centralized, order-driven stock market, the same way it did in Toronto.

By 1995, the MSE decided to further invest in its automation technology, replacing CATS with a new electronic trading system known as the Sistema de Interconexión Bursátil Español. This new system successfully connected four Spanish stock exchanges, including Madrid, Valencia, Bilbao, and Barcelona. These four exchanges were combined to form a unified, continuous market through this new system, providing order fulfillment, price information, and other real-time market data.