Trading Technologies is common in today’s century, and the rise of the internet has brought a new model for doing business electronically.
Some years back, the financial tools are the ideal products since they are largely non-material, and their trading importantly involves the communication of information.
Information can now move electronically; trading technologies offer substantial benefits in terms of greater efficiency in the trading process and reduced costs.
The benefits of these technologies are not straightforward and require investment in the trading technologies venues and the systems to automate the processing of trades.
The internet has brought us the potential to trade efficiently across borders, either through the consolidation of two or more national exchanges on to a single platform or on the other way by creation of a single pan-European trading platform.
And we can also make use of systems that can access multiple markets from a single screen.
Findings show that Euronext is the most successful consolidation, bringing together cash and derivatives exchanges in Amsterdam, Paris. Brussels and Lisbon and the London International Financial Futures and Options Exchange (LIFFE).
The statement not given a single point of access to listed stocks of these countries, but rather offers greater trading technologies through its consolidated clearing system.
However, it offers integrated trading and settlement. It enables so-called straight-through processing (STP) of trades, whereby deal information is passed straight through into the clearing and settlement systems allowing the process to be automated, improving efficiency while reducing the errors that result from manual processing, reducing costs.
Trading systems suppliers also offer electronic access to multiple exchanges, while acting as agency brokers and competing with traditional brokers.
Also established to take advantage of new trading technologies were the crossing networks, most notably Posit and E-Crossnet. Both offer electronic or phone-based trading, where bids and offers are brought together at a series of timed matching during the day.
The internet has already transformed equity and FX trading. But the technology and business models are still evolving. Buy-side organizations need to carefully evaluate where to invest their resources to take the new electronic markets’ greatest advantage.