Volume counting

Volume counting

The SEC dictates how volume is counted. Thus, volume is counted in the same manner on all markets based on the above reporting structure. Any time money changes hands (or any time capital is risked), it must be counted as a trade. Examples: 1) One registered market participant on Nasdaq buys 100 shares into inventory from another registered market participant or from one of its clients. In either case, it is counted as 100 shares. 2) One member firm on the NYSE or Amex buys 100 shares from another member firm. The Specialist matches the order between the two firms and it is counted as 100 shares. 3)The Specialist sells 100 shares from his inventory to a member firm on the NYSE. It is counted as 100 shares. 4) A Market Maker receives an order to buy 100 shares from it's client. It does not have 100 shares in its inventory. It must go buy 100 shares from someone else. It then sells these 100 shares to the client. Thus, there are two trades in this example for a total of 200 shares.

Volume Counting

On an exchange, the process of computing trade volume, that is, determining how many trades take place on a given trading day. In the United States, the SEC determines the methodology of volume counting. For example, if a broker orders 1,000 shares of a stock, it counts as 1,000 trades for purposes of volume counting. On the other hand, if a broker orders 1,000 shares from another firm, but the firm does not have 1,000 shares to sell, the firm buys them from another firm and immediately re-sells them to the broker. In this case, the SEC counts these transactions as 2,000 trades.