How Technology Has Changed Global Financial Market

Even though we made profits in the last week of our trading game, we were still unable to compensate for our total losses incurred. Previously, we had the mind-set that the stock market was far simpler; people buy shares in the hopes of making money. Some people buy and sell often for speculation purposes, while others are long term investors. Sometimes people make a lot of money very quickly, and sometimes people lose a great deal just as fast.

In light of this, it is possible for large financial services firms to invest in inhibiting the uptake of the IEX system as evidenced in their reluctance to use this service owing to its “slowness” compared to their own systems. For the untrained eye, the presumption to switch to the faster option would be correct since after all, fast is good in the world of computing, right? On the contrary, providing these firms with this allowance only curtails future attempts to regulate the market as HFT algorithms get better and more technologies appear to widen the speed gap. Additionally, it will also protect the status quo of the large firms dominating the industry at the peril of individual investors and smaller trading firms. One important question that arises is this; what risks does a monopoly in the financial trading industry impose on the future of economic markets? Considering that the markets evolved to their current states to support investor participation, their abstraction from the market in this proposed environment imperils the integrity of the financial industry as a fair trading

Unfortunately, this issue has been around for a long time and the technologies available seem to be just as old. Many financial systems that are available today are not much different from those engineered in the 1990s, which are still being used in some firms (Bres). Therefore, there is an apparent need for change and new thinking in the world of financial systems. Luckily, a new wave solution has finally surfaced- the cloud.

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.

In this paper, I chose to use the investing strategy rather than the trading strategy. The trading strategy is very common in most stock markets as well as the global stock market,. The strategy involves the buying and selling of shares in the stock market. However,

Until the Flash Crash in 2010, only few people were bothered by high frequency traders (HFT). As it has caught our attention, the damage HFT firms could do to our market, people such as Michael Lewis have started questioning if HFT should be allowed to exist in the market in the first place. Prospects of the US Securities and Exchange Commission (SEC) passing new regulations limiting these firms have become increasingly appealing to a diverse group of brokers, investors and alike. In Present Shock Rushkoff criticizes that these firms (or algorithms) do not care about the businesses they invest in and are more concerned in turning time into money. But HFT isn’t a

Institutions often trade of shares and institutional order’s can have a major impact on market volatility. In smaller markets, institutional trades can potentially destabilize the markets. Moreover, institutions also have to design and time their trading strategies carefully so that their trades have maximum possible

According to Zaloom (2003), “Information technologies underpin traders’ daily practices of economic judgment by shaping the available informational resources” Yet, the transition from tradition face-to-face to electronic trading system continues at an extremely rapid rate. Accepting the change is vital but what is more is that we deeply understand benefits and fully aware of drawbacks of this shifts away. The first part of the essay highlights on the advantages of the electronic trading platform, while the second focus potential disadvantages. The evaluation is based primarily on four key premises: market accountability, price efficiency, information transparency and users’ experiences.

The main purpose of this paper is to study the high-frequency trading and its application in the Chinese market. This study includes the status, characteristics and development trend of foreign high-frequency trading, on the basis of high-frequency trading system structure analysis and the development of Chinese high-frequency corresponding regulatory Suggestions. High-frequency trading has high speed and complex instructions operation procedures, low latency, open time is short, trade frequently, the characteristics of its bulk deity, and has some of the participants in the securities trading of lower transaction costs and other advantages, at the same time, brought negative effects such as market turmoil.

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

In addition to the price improvement benefits, dark pools have also been touted to improve the level of service in the market by introducing competition to traditional exchanges (10). This can be interpreted as a good sign by the government and regulators as increased competition translates into more benefits for the consumers and a more dynamic marketplace. An implication of this is that dark pools have forced stock exchanges to introduce more technological innovations and operating their own dark pools to compete, providing more choice to the consumers (5). Contrary to common perception that dark pools harm price discovery, Haoxiang Zhu, a financial Economist at MIT Sloan School of Management mentions that dark pools actually aid the process of price discovery (9). According to (9), Zhu’s paper shows that dark pools attract less informed traders who force better informed traders whom may not be able to fill their orders back to public exchanges, resulting in a higher concentration of informed traders contributing to the price discovery process. This promotes market

In 1996, the Indian parliament passed the Derivatives act, which allowed online transaction of shares, thus making it much easier for all stakeholders to perform their task. Online trading, in simple terms, can be understood as buying and selling securities through the internet. Such trading commonly necessitates an online trading platform offered for order initiation and completion. This trading platform provides the investor with all the trading information necessary to make informed investment decision at any point of time. Securities trading can be done with a click of a few buttons and the investor has access to live market watch functionalities and intraday research dashboard with quick login.

(2010) back-test a pairs trading algorithm using intraday data over a twelve month period in 2007, and conclude that returns are highly sensitive to the speed of execution. Moreover, accounting for transaction costs and enforcing a ‘wait one period’ restriction, excess returns are complete eliminated. Engelberg et al. (2009) seek to explain the nature behind pairs trading profits, and find that possibilities for profit are greatest soon after equilibrium divergence, and that the divergence is strongly related to how information disperses through the stocks that form the pair. Idiosyncratic liquidity shocks result in higher profitability than idiosyncratic news and when there is information common to both legs of the pair, profit possibilities may arise when the information is more quickly incorporated into one stock than the

Advancements in technology and the exponential rate at which it is evolving has revolutionized the way the financial system is able to conduct its activities and connect to the public all around the world. The evolution of technology has greatly contributed to economic developments worldwide, however, coupled with the increased dependence on technology is the complexity and sophistication of cyber security threats that has resulted in the rise in cybercrime not just in a technologically driven country like Australia but worldwide.

Totally proficient stock exchanges are non-existent obviously yet this improvement helps us to better comprehend what is going ahead in the genuine world.in the not so distant future I will attempt to exhibit (and picture) how we can tell the securities exchanges are getting more effective.