What is the Securities Industry Automation Corporation?

The Securities Industry Automation Corporation is the company that provides technical services for several major stock markets. It is a subsidiary of NYSE Euronext, which owns the markets. Its work includes operating the stock market and options markets quotation and reporting systems.

Created in 1972, the Securities Industry Automation Corporation was originally owned jointly by the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX). NYSE owned a two-third share and AMEX one-third, until 2006 when what was now called NYSE Euronext bought out AMEX's share. NYSE now operates the New York Stock Exchange and Euronext, a pan-European stock exchange.

The Securities Industry Automation Corporation's main role is as the technology provider for the Consolidated Tape Association. This is the organization that runs the Consolidated Tape System, which electronically reports details of the latest sales and trades of stocks on the relevant exchanges. It also runs the Consolidated Quotation System, which reports the quotations for stocks being offered by traders and requests by traders to buy stocks. This data is then processed and published by Nasdaq, which is how most traders access the data.

Another role of the Securities Industry Automation Corporation is to operate the technology for the Options Price Reporting Authority. This is the organization that provides both sales data and quotations for markets in options trading. This involves considerably more data than with standard stocks, known as equity trading. Between 2005 and 2008, the amount of data reported by the system increased more than 10-fold, mainly because of changes that allowed traders to settle upon prices to the exact cent rather than, as previously, in five cent increments.

There are a wide range of specific technical challenges facing the Securities Industry Automation Corporation. One is security: only authorized users must be able to access the data handles by the group. This is partly to protect the benefit offered to subscribers of the relevant services, but also to avoid potential fraud.

Another challenge is reliability. The corporation must make sure data is consistently available and updated to schedule. If it failed to do this, trading could theoretically be put on hold, causing serious financial harm to traders and investors. The systems must also have low latency levels. This means that there is as little time delay as possible between data being sent and received.