Programmed Capitalism: Computer-mediated Global Society by Maurice Estabrooks

Author:Maurice Estabrooks [Estabrooks, Maurice]
Language: eng
Format: epub
Tags: Social Science, General
ISBN: 9780873324809
Google: C5vknQEACAAJ
Goodreads: 4173773
Publisher: Routledge
Published: 1955-01-01T00:00:00+00:00

Computer Infrastructures’ Threat to Trading Floors

It became evident by 1985 not only that did stock exchanges had to automate to survive, but also that automation could lead to the elimination of the trading floor altogether, since it could be an obstacle to competing effectively with the likes of NASDAQ and Instinet. If this were the case, stock exchanges would have no choice but to adopt the same computer-based infrastructures as their competitors, even if this meant making their trading floors redundant.

Global computer-mediated trading threatens medium- and small-sized stock exchanges, in particular. With the power and performance of computers continuing to increase, and the economies of networks continuing to provide more efficient global coverage, much of the global trading may eventually be done in the big three global centers of Tokyo, New York, and London. Since communications networks can efficiently link all traders in the world with these global centers, the only possible role for the other exchanges may be as regional centers or local nodes, in which limited or perhaps no trading takes place. In other words, today’s smaller centers may become simply electronic switching centers in the future, in the same manner as computers are making all telephone exchanges completely electronic.

One of the first to realize this was Pearce Bunting, president of the Toronto Stock Exchange. In the TSE quarterly report to its members in 1985, the president said, “The Toronto Stock Exchange faces the prospect of losing further trading in Canada’s major companies to foreign trading systems and of eventually becoming a backwater exchange. . . .”4 Mr. Bunting went on to say that the march of technology would eventually lead to the demise of the Toronto Stock Exchange’s new and expanded trading floor.

The same experience and fears began to plague even the London Stock Exchange in the aftermath of the Big Bang on October 27, 1986 (see Chapter 8). The London Stock Exchange’s main attraction was its newly installed computerized trading network, but traders were abandoning the floor in large numbers for their own newly wired dealing rooms. Within six weeks of the October event, the regular crowd on the floor of the LSE had dwindled from 1000 to fewer than 100, and speculation was that it would soon be abandoned entirely. Business Week wrote, “Available soon. Prime location in historic City of London. Nearly 25,000 sq. ft. Equipped with latest telecommunications technology. Inquire at London Stock Exchange.”5

In the latter half of the eighties, stock exchanges everywhere confronted an incredible irony that few businesses would want to face. Competitive forces were compelling them to automate to survive. The same set of forces was pressuring them to enter the international marketplace and link up, so that they could trade in stocks around the world and around the clock. But this could mean eliminating the floors altogether. If this happened, there was no telling where trading would take place: it could be in major centers, or it could be distributed throughout the world with no physical centers whatsoever. In any event, the world would probably not need as many regional exchanges.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.