What Is Runoff?
Runoff is used to refer to the procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Since actual ticker tape isn't used anymore, the runoff period is now used to describe trades at the end of a session that may not be announced or reported until the start of the next session.
- In the era of paper ticker tape, runoff was the process of reporting and printing the closing price of each stock on an exchange at the end of the day.
- Ticker tape from the daily runoff was collected for ticker tape parades where it functioned much like confetti thrown from apartment and office windows.
- Today, runoff is still used but refers to trades that occur at the end of the trading session and which are not reported until the beginning of the next.
The Basics of Runoff
In the days of paper ticker tape, stock trades that occurred at the very end of the trading day—and thus which represented the closing price of a stock for the day—were inputted into an analog system and then fed to ticker tapes around the world for reporting. Newspapers, for example, would rely on the runoff to print stock quotes in the next morning's newspaper. The runoff could last for several minutes or even hours and produce yards of physical paper documentation.
Ticker tape from the runoff was often cut and saved to function as confetti, to be thrown from the windows above parades, primarily in lower Manhattan. Ticker tape parades often celebrated some significant event, such as the ends of World War I and World War II, or the safe return of one of the early astronauts or a winning home-team's championship.
History of Ticker Tape and Runoff
Ticker tape was the first electronic communications medium, transmitting stock price information over telegraph lines. It was widely used between for about 100 years, 1870 to 1970. Ticker tape itself was a paper strip that ran through a machine called a stock ticker, which printed abbreviated company names as alphabetic symbols followed by numeric stock transaction price and volume information. The term "ticker" came from the sound made by the machine as it printed.
Newer and better tickers became available in the 1930s, but they still had an approximate 15-to-20-minute delay. Paper ticker tape became obsolete in the 1960s, as television and computers were increasingly used to transmit financial information. Although paper ticker tape is no longer used, the concept of ticker tape lives on in the scrolling electronic ticker boards found on the walls of many offices across the country. They still convey the same information. Many of today's tickers and ticker simulators use colored characters to indicate whether a stock is trading higher than the previous day’s (green), lower than previous (red), or has remained unchanged (blue or white).
The first stock price ticker system using a telegraphic printer was invented by Edward A. Calahan in 1863; he unveiled his device in New York City on November 15, 1867. Early versions of stock tickers provided the first mechanical means of conveying stock prices ("quotes") over a long distance over telegraph wiring. In its infancy, the ticker used the same symbols as Morse code as a medium for conveying messages. One of the earliest practical stock ticker machines, the Universal Stock Ticker developed by Thomas Edison in 1869, used alphanumeric characters with a printing speed of approximately one character per second.