FREE online courses on Information Technology - Chapter 3 THE IMPACT OF
INFORMATION TECHNOLOGY - Natural Growth Generates an Impact
Technology dramatically impacted the securities business. At
first, the use of technology was for routine transactions processing. Soon the
back-office information appeared valuable for brokers so they could know their
customer's positions. Traders also adopted technology to facilitate new trading
strategies. The confluence of all of these trends has led to a highly automated
industry critically dependent on information technology.
Several exchanges are entirely automated or moving in that
direction. The “Big Bang” in London,
which eliminated fixed brokerage rates and encouraged off-floor trading, has
emptied the floor of the exchange. The NASDAQ computer system for
over-the-counter stocks in the U.S.
has no actual exchange floor; technology has eliminated the need for a physical
place to meet to buy and sell stock. By 1995 there were days in which the volume
of stocks traded on the NASDAQ exceeded the volume on the New York Stock
Exchange.
Today several exchanges offer after-hours trading, even
twenty-four-hour trading may become routine. After-hours trading will take place
only through computers and communications networks. Within a few years, it
should be possible to trade securities from virtually anyplace in the world,
anytime of day or night. Technology will completely remove time and space
requirements for trading.
