Paper Info
Title
Technology for Trading: What Works and What Fails
Abstract
The computerization of financial trading has evolved differently than experts have forecast. Tremendous progress in order processing speeds and new algorithmic tools have driven market volumes well beyond projections. At the same time, expensive, high-profile technology developments have failed, and legacy practices based on intermediated floor and telephone trading have proven resilient. Based on 20 years of research on trading and market systems, this article identifies the regularities among the IT developments that have succeeded, and contrasts them with those trading technologies that have failed. We find market participants adopt new market systems when they offer advantages: (1) in openness and transparency, (2) in meeting a real need of traders, (3) in lowering cost, and (4) in retaining simplicity and case-of-use. Examples from a number of equity and financial market technology initiatives are described. We conclude with a three-part framework for analyzing the prospects of new market systems.
Year
DOI
Venue
2007
10.1007/978-3-540-78550-7_12
Lecture Notes in Business Information Processing
Keywords
Field
DocType
financial market,ease of use
Order processing,Transparency (graphic),Market microstructure,Openness to experience,Market system,Equity (finance),Finance,Financial market,Industrial organization,Algorithmic trading,Business
Conference
Volume
ISSN
Citations 
4
1865-1348
0
PageRank 
References 
Authors
0.34
3
1
Name
Order
Citations
PageRank
Bruce W. Weber132259.62