V.8:3 (121-123): Liquidity Data Bank: Big promises, small deliveries by Thomas K Bonen

V.8:3 (121-123): Liquidity Data Bank: Big promises, small deliveries by Thomas K Bonen
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Liquidity Data Bank: Big promises, small deliveries by Thomas K. Bonen

In 1984, the Chicago Board of Trade (CBOT) introduced the revolutionary Liquidity Data Bank (LDB) to the general public. It was a truly unique venture intended to open up the exchange and its price information to the investing public with hopes of increasing non-member trading in its sagging agricultural products. With this introduction, the CBOT created a database of information that previously only floor traders could observe. It was a database of the actual trading volume for each price traded during the day—an absolutely novel disclosure. Armed with this exciting new database, the public (non-members of the CBOT) could know the specific volume traded at each individual price throughout the day's trading session.

The LDB was a monumental undertaking and one of the most forward-thinking disclosures ever made by an exchange or institution. The CBOT actually provided something not demanded by its customers or initiated by its competitors. At the time, it was the perfect—and necessary—complement to the Market Profile, a new form of market and price analysis being developed by CBOT member Peter Steidlmayer and his colleagues.

The LDB and Steidlmayer's "price-time-volume analysis" were supposed to be the perfect marriage of data and analysis. But was it a perfect union?

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