A sound Information Technology (IT) infrastructure can be critical to a business organization’s operational and financial success. A problem, or “glitch,” in a firm’s IT infrastructure can cripple an organization and cause severe long-term issues. Examples of such can be seen by examining the case of Knight Capital, the 2010 Dow Jones “Flash Crash,” and the use of High-Frequency Trading (HFT) on Wall Street.
HFT has been in use since the late 1700’s, although not in the form that we are familiar with today. Investors explored all available avenues to increase the speed of information, and gain a competitive advantage. Savvy traders crushed their competitors through purchasing faster ships, mail services, and early adoption of the telegraph. Today, HFT is algorithm-based. Supercomputers react to market changes, such as price and timing, and automatically initiate trades without the need for human interaction. This has allowed investment firms to buy and sell stock at speeds thousands of times faster than an average floor trader, and reduce costs through economies of scale.
Use of HFT has grown exponentially since the 1990’s. In 2012 alone, 6.4 billion shares were traded through some type of HFT. There are signs, though, that the growth of HFT is tapering off. Profits from HFT in 2014 are estimated at 1.25 billion dollars, down 74% from its 2009 peak of 4.9 billion. Nevertheless, it is still an integral part of the US Stock Market.
HFT’s impact on the US Stock Market
In Michael Lewis’s Flash Boys, Lewis expands upon the issues related to high frequency trading, and argues that there are built in inequalities and issues in the financial markets after the emergence of regulations and technology within the stock markets and exchanges. Lewis predominantly focuses on the United States stock markets and how inequalities are being created by High Frequency Traders (also known as HFTs). The essential questions are whether High Frequency Traders are weakening the market and creating inequalities or hardships, and, if they are, who is primarily affected? Extensive research proves how high frequency trading has a negative effect on the market and potential
The New York Stock Exchange traces its origin back 200 years. Centuries of growth and innovation the NYSE remains the world's foremost securities marketplace. Over the years its commitment to investors has been unwavering and its persistent application of the latest technology has allowed it to maintain a level of market quality and service that is unparalleled. The NYSE has grown to become the global marketplace of today.
The world continues to grow and with that growth there is a progression of technology. No company can stay in the past of technology or they will be left behind. Right now, the NYSE has a hybrid system, where both humans and computers trade stocks. There are many instances where electronic trades have caused many problems, as
The New York Stock Exchange utilizes the NYSE Euronext, integrating an electronic stock exchange model with their in-person trading floor model in 2007. This change introduced the NYSE as the first global stock exchange through their integration of the electronic stock exchange model introduced by Amsterdam-based Euronext [10]. Despite their electronic stock exchange, buyers and sellers still meet on the NYSE floor in-person to negotiate the sales and purchase of the stocks. The NYSE is one of the only remaining stock exchanges where physical interactions are necessary for stock sales and purchases.
Stock Exchange was formed trading equities auctions style. The market was in good health and around 1930 the traditional way stocks was to research them using fundamental-analysis, which analyzed a company’s health by examining their historical metrics. This changed in 1951, Harry Markowitz applied mathematical concepts to the market, which helped create algorithms that could calculate several different stocks simultaneously. By the early 1970s the markets started moving away from the traditional auctions to Electronic Communication Networks *. Algorithm trading presents series of problems, a few for each side of the playing field, so individuals are not safe playing with them or against them.
Once a common sight in virtually any American office, the electric typewriter is now a thing of the past. In fact, the century between 1910 and 2010 witnessed both the introduction and the obsolescence of the electric typewriter to the dismay of old school typists who are now forced to find second-hand models if they still want to use them. To determine how the electric typewriter rose and fell within such a relatively short period of time, this paper provides a review of the relevant literature concerning the history of electric typewriters and what happened to cause their obsolescence by 2010. A summary of the research and important findings concerning these issues are presented in the conclusion.
According to statistics from Bank of Japan, HFT account for more than 50 percent in Tokyo Stock Exchange (TSE) in September 2012, which is the second largest sock exchange in Asia. Rather than attempting to restrict HFT in the market, Japan has made upgrades to its trading system “Arrowhead” to embrace HFT. “Arrowhead” brings millisecond-level speeds to both transactions and market-information distribution, achieves an order execution time of 5 milliseconds and distributes information in 3 milliseconds5. It also distributes all order information on all issues in real time. High frequency traders could get benefit from this real-time access to all order and quote data. In addition, Japan stock market is the
There is a severe variation of capital at risk of high frequency trading when compared to capita at risk for institutional investors as noted by KF&Y. Capital at risk is the total amount of capital that an organization deploys in all of its market positions at any specific point of time, as defined by IRRC institute. A high frequency trader generally keeps its capital at risk negligible. Although, HFT companies contributes for nearly 65% by volume in equities, their capital risk is small. On the other hand, the institutional investors or non- high frequency traders amount to a larger market ownership, more than 64% at the end of 2009. The hypothesis is that a small percentage of minority ownership
Information technology can help to open the new business or market. The best evidence is e-commerce become popular. The website of many stores are not only sale their trademark, but also the online store, such as Monopoly luxury stores, Marshalls, Saks Fifth Avenue, and Bergdorf Goodman, the super market Wal-mark, Costco. The performance of these companies are very good whatever store or online-store. Undoubtedly, that is information technology helped them opened the e-business market.
While there is no definite answer to what "high frequency" might be, it has been generally accepted that they are the type of trades automated by machines using proprietary algorithms and trade at very high speeds, often executing at least a few trades in under a second. HFT strategies can be broadly categorized into 4 groups:
Next point that I feel needs to be evaluated is “Get to the market first.” Being the first one to adopt and apply new information technologies can bring the biggest positive effect to a company. Bill Gates states that, whoever is first to use digital information to operate business, has a great chance of putting company ahead of its competitors.
The stock market has been the basis of finance in America for over a century, but it was a long road for the modern stock exchange. Trading profits and portions of companies have been a part of making money for hundreds of years, which then lead to the formation of the current complex system of trading, biding, selling and buying on the trading floor. Throughout history the intricate stock market system has become the staple of American and global economics.
Information Technology (IT) is a critical and, oftentimes, complex component of an organization’s structure. Despite its importance, IT is often viewed as a ‘black hole’ by senior management of organizations- consuming valuable resources and assets. Unfortunately, this mentality can greatly hinder the economic advancement capabilities and capacities of an organization. As previously indicated, IT is a critical component to both the daily and future business needs of an organization. Senior managers of organizations must view IT as an essential piece of their company’s portfolio that can greatly increase the organization’s efficiency, earning potential and innovation.
When we look at information systems designed for business, we tend to recognize that it involves integrated and co-ordinate network of components, which combine together to convert data into information. In a recent book entitled a brief look into history-author sage, explains that Information system is essentially made up of five components hardware, software, database, network and people. These five components integrate to perform input, process, output, feedback and control. (Sage, 1968). The structure of information is composed of input, output, constraints, purpose, Boundaries. To explain these functions we will look at a business. A call center will be an example so we will be able to understand and recognize functions
Globally, retailing is witnessing epic transformations. The use of technology has fueled upheavals in the retail landscape that are revolutionary in scope, and unprecedented in nature (Leventon, Gupta & Magal, 2011). Technology has advanced from the automation of structured processes to systems that are truly revolutionary in that they introduce change into the fundamental business procedures, workflow and management of an organization. Numerous studies have shown that the employment of new or the updating of a business’s existing technology contributes to a firm’s competitive advantage, which in turn creates greater value for the customer (Altshuler, Gelb & Henry, 2010; Bharadwaj, 2000; Carr, 2003; Mellville, Kraemer, & Ghurbaxani, 2004). The main operational and human resource challenges for Fictitious Company that will be addressed from a management information system perspective in this report are: low levels of inventory, manual procurement procedures, access to new trends, and security and ethical breaches by employees.