A financial quotation refers to specific

market data ''For market data as used in marketing, see marketing information system'' In finance, market data is price and other related data for a financial instrument reported by a trading venue such as a stock exchange. Market data allows traders an ...

relating to a

security Security is protection from, or resilience against, potential harm (or other unwanted coercive change) caused by others, by restraining the freedom of others to act. Beneficiaries (technically referents) of security may be of persons and social ...

commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a comm ...

. While the term quote specifically refers to the

bid price A bid price is the highest price that a buyer (i.e., bidder) is willing to pay for some goods. It is usually referred to simply as the "bid". In bid and ask, the bid price stands in contrast to the ask price or "offer", and the difference betwee ...

ask price Ask price, also called offer price, offer, asking price, or simply ask, is the price a seller states they will accept. The seller may qualify the stated asking price as firm or negotiable. Firm means the seller is implying that the price is fixed ...

of an instrument, it may be more generically used to relate to the last price which the security traded at ("last sale"). This may refer to both exchange-traded and

over-the-counter Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a requirement for a prescription from a healthcare professional, as opposed to prescription drugs, which may be supplied only to consumers possessing a valid prescr ...

financial instruments.

Bid and ask

The bid price (also known as the buy price) and the ask price (also known as the sell price) of a security are the prices (and often quantities) at which buyers and sellers are willing to purchase or sell that security. The bid shows the current price at which a buyer is willing to purchase shares, while the ask shows the current price at which they are willing to sell. The quantities at which these trades are placed are referred to as "bid size" and "ask size". For instance, if a trader submits a limit order to buy 1,000 shares of MSFT at $28.00, this order will appear in a

market maker A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that it ...

for MSFT's

book A book is a medium for recording information in the form of writing or images, typically composed of many pages (made of papyrus, parchment, vellum, or paper) bound together and protected by a cover. The technical term for this physical arr ...

with a bid of $28.00 and a bid size of 1000. The difference between the bid and ask price is known as the

bid–ask spread The bid–ask spread (also bid–offer or bid/ask and buy/sell in the case of a market maker) is the difference between the prices quoted (either by a single market maker or in a limit order book) for an immediate sale (ask) and an immediate pur ...

Equities

Level 1 Access

''Level 1 quotations'' represent realtime bid/ask data, the most commonly displayed market data. Level-1 data typically will display the Best-Bid-Offer ("BBO" or "Inside Quote"), i.e., the lowest ask and highest bid available at the time.

Level 2 Access

''Level 2'' data displays the best bid and ask prices (also known as "top-of-book") for each market participant in a given security. In other words, at a given time there may be several

s participating in trade matching for a specific stock. Level 2 data will display the highest bid and lowest ask for each individual market maker. Level 2 information is of interest to traders and brokers because it indicates the buying and selling pressure behind individual securities. Similar in format to live streaming share prices, a typical Level 2 screen is split in two vertical halves and will show orders on both the bid price of a security (left-hand side) and the offer price (right-hand side). On major, heavily traded stocks the "depth" of the orders can quite often be in excess of 20/30 orders to both buy and sell at lower (left) and higher (right) prices. Traders can use this information to predict the short-term movement of a share or security in conjunction with volume traded, and attempt to profit from this information, which is usually legal as the information is in the

public domain The public domain (PD) consists of all the creative work A creative work is a manifestation of creative effort including fine artwork (sculpture, paintings, drawing, sketching, performance art), dance, writing (literature), filmmaking, ...

. The reason for this is that market makers sit “behind” such a screen by being obliged to both buy and sell the share at the posted price up to what is known as normal market size. For certain market centers such as

NASDAQ The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...

, a full depth-of-book (DOB) is available, whereby every quotation for every market participant is displayed.

UK Level 2

The stock exchange electronic trading system (SETS) is an electronic order-driven system for trading the UK bluechip stocks including

FTSE 100 The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" , is a share index of the 100 companies listed on the London Stock Exchange with (in principle) the highest market ...

and FTSEurofirst 300 stocks. The SETS order book matches buy and sell orders on a price/time priority. On

SEAQ The Stock Exchange Automated Quotation system (or SEAQ) is a system for trading small-cap London Stock Exchange (LSE) stocks. Stocks need to have at least two market-makers to be eligible for trading via SEAQ. New securities cannot be listed v ...

, all buys and sells go through a market maker who acts as an intermediary. The basis of SETS is that it directly matches willing buyers and sellers, creating efficiency in the markets by doing away with the intermediary of the market maker. This efficiency is true while the SETS system is populated by the most liquid and heavily traded stocks, but if matched bargains operate on less liquid stocks, waiting for a buyer to match with a seller could take hours, days or weeks. Because of the efficiency of the SETS system stocks traded tend to have narrow spreads so the cost of entry and exit from a position is much smaller. As an individual investor, should you wish to buy or sell a SETS stock, your broker will invariably still trade through a market maker, who will not display separate prices but simply use the SETS Level 2 screen to indicate where the market lies.

References

External links

Level I and Level II QuotesElectronic Trading: Level I, II and III Access
{{DEFAULTSORT:Financial Quote Financial markets