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Liquidity

RECENT NEWS
BNY Mellon unveils Intraday Liquidity Analytics
Banking Business Review  May 13  Comment 
Bank of New York Mellon (BNY Mellon), an investment management and investment services provider, has rolled out Intraday Liquidity Analytics, which will enable clients to deal with liquidity transparency and intraday overdraft coverage...
Markets to trend higher on improved liquidity
The Economic Times  May 12  Comment 
Unprecedented global liquidity, improving macroeconomic scenario and govt’s commitment to lower subsidy burden were chief propellants of the Nifty’s climb.
Markets at new high; is it liquidity versus logic?
The Economic Times  May 11  Comment 
The rally has been extraordinary but I would advice to take the money off the table. The overall setup of the market is slightly difficult to assess as of now.
Sensex ends above 20000 on factory output data, cheap global liquidity
The Economic Times  May 10  Comment 
Market analysts said at current levels, stocks were still not too costly as the Nifty’s forward P/E was still below the median 15 times FY14 earnings.
SBI Liquidity Market Selects smartTrade’s Technology To Aggregate FX Liquidity Globally In The Quest For Best Execution
Mondo Visione  May 7  Comment 
smartTrade Technologies , an industry leader in cross-asset liquidity management software and solutions for banks, broker-dealers, asset managers, and large hedge funds, announces today that SBI Liquidity Market , a Japanese leading FX...
Liquidity situation will improve in a few months: Subbarao
The Hindu Business Line  May 6  Comment 
The liquidity situation should get less uncomfortable in a few months from now, according to RBI Governor D. Subbarao. The RBI will consider all the options available with it to t...
Liquidity squeeze is likely to be ‘less uncomfortable’: Subbarao
The Hindu Business Line  May 6  Comment 
Hope discomfort on liquidity lessens in a few months: RBI chief
Reuters  May 6  Comment 
Liquidity rule timetable irks ABA
The Australian  May 6  Comment 
THE major banks have taken aim at the prudential regulator over a conservative timetable for new liquidity rules.
Infra sector says measuresto ease liquidity missing
The Hindu Business Line  May 3  Comment 
Construction and infrastructure sector players have termed the repo rate cut by 25 basis points a positive step but say nothing has been done to directly address their liquidity co...
Open market operations, an option for RBI to control liquidity
The Hindu Business Line  May 3  Comment 
Eminent economist and Chairman of the Prime Minister’s Economic Advisory Council C. Rangarajan seems to believe the cash reserve ratio may have outlived its utility. CRR is the impounding...




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Liquidity

Liquidity is defined as the ability to trade large size quickly at a low cost. It is one of the most important characteristics of a market. A liquid market allows traders to implement their strategies cheaply, normally with a limited bid/ask spread. A liquid market is characterized by high volume. It is generally less volatile than an illiquid market.

Usually, you can refer to three dimensions of liquidity - time, size and cost:

• “Immediacy” refers to how quickly you can execute a trade of a given size at a given cost.

• Width refers to the cost of executing a trade of a given size, including commissions.

• Depth refers to the size of a trade that can be executed at a given cost. Width and depth are very strictly related.

A liquid market is a market where you can trade large size quickly at low cost. Liquidity refers to how quickly you can convert your assets into cash. [1] Liquidation is the conversion of assets into cash by an Investor getting rid of a position in a particular type of security. [2]

For example, a portfolio manager might decide to liquidate a position in a stock by selling all the shares of that stock held in the portfolio. [3]

1610s, from liquidus. [1] Liquid Financial sense of "capable of being converted to cash" is first recorded 1818. [2]

References

  1. ↑ Stock Investing for Dummies‬ By Paul Mladjenovic pg22 ISBN-10: 0470401141
  2. ↑ Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott Accounting Professor ISBN-10: 0618176519 pg 212
  3. ↑ Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. ISBN-10: 0618176519 pg212

4. http://www.bestcashloans.org.uk/

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