Liquidity

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SeekingAlpha  Apr 28  Comment 
Yahoo  Apr 26  Comment 
The top U.S. banking regulator on Tuesday released its proposal for establishing a Net Stable Funding Ratio, a final piece in the puzzle to strengthen banks' liquidity in case they come under financial stress. The ratio is intended to ensure...
The Economic Times  Apr 22  Comment 
The state has also been among the largest borrowers this facility, notes a report by ratings firm India Ratings.
Mondo Visione  Apr 21  Comment 
Recently-launched electronic bond-trading venue OpenBondX, LLC (www.openbondx.com) is implementing an innovative pricing strategy that previously has helped transform other markets. A twist on the “Maker-taker” rebate pricing model that...
Financial Times  Apr 19  Comment 
Market turmoil draws attention to shortcomings of region’s counterparts to the Vix
Mondo Visione  Apr 14  Comment 
SIFMA’s Asset Management Group (SIFMA AMG) today announced it has submitted a supplemental comment letter to the Securities and Exchange Commission (SEC) regarding the SEC’s  proposed liquidity management rules  for open-end funds, including...
MarketWatch  Apr 14  Comment 
Treasury’s Antonio Weiss and Fed Governor Jerome Powell refused to blame Dodd-Frank for perceived fixed income liquidity issues and instead praised the law for improving financial system safety and soundness.
Mondo Visione  Apr 14  Comment 
Please click here to access the Markit report analyzing liquidity for Dutch equity derivatives. The majority of retail investors in The Netherlands have mainly access to TOM and/or Euronext for Dutch equity derivatives orders. Therefore, the...




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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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