Technology And Stock Market Essays - Financial Markets, Stock Market

Technology And Stock Market The purpose of this research paper is to prove that technology has been good for the stock market. Thanks to technology, there are now more traders than ever because of the ease of trading online with firms such as Auditrade and Ameritrade. There are also more stocks that are doing well because they are in the technology field. The New York Stock Exchange and NASDAQ have both benefitted from the recent technological movement. The NYSE says they "are dedicated to maintaining the most efficient and technologically advanced marketplace in the world." The key to that leadership has been the state-of-the-art technology and systems development. Technology serves to support and enhance the human judgement at point-of-sale. NASDAQ, the world's first fully electronic stock market, started trading on February 8th, 1971. Today, it is the fastest growing stock market in the United States. It alo ranks second among the world's securities in terms of dollar value. By constantly evolving to meet the changing needs of investors and public companies, NASDAQ has achieved more than almost any other market, in a shorter period of time. Technology has also helped investors buy stocks in other markets. Markets used to open at standard local times. This would cause an American trader to sleep through the majority of a Japanese trading day. With more online and afterhours trading, investors have more access to markets so that American traders can still trade Japanese stocks. This is also helped by an expansion of most market times. Afterhours trading is available from most online trading firms. For investing specialists, technology provides operational capability for handling more stocks and greatly increased volumes of trading. Specialists can follow additional sources of market information, and multiple trading and post-trade functions, all on "one screen" at work or at home. They are also given interfaces to "upstairs" risk-management systems. They also have flexiblity to rearrange their physical workspaces, terminals and functional activities. Floor brokers are helped with supports for an industry-wide effort to compare buy/sell contracts for accuracy shortly after the trade. They are also given flexibility in establishing working relationships using the new wireless voice headsets and hand-held data terminals. The ability to provide new and enhanced information services to their trading desks and institutional customers is provided. They have a comprehensive order-management system, that systematizes and tracks all outstanding orders. Technology gives a market's member organizations flexibility in determining how to staff their trading floor operations as well as flexiblity in using that market's provided systems, networks and terminals or interfacing their own technology. They are given assurance that their market will have the systems capacity and trading floor operations to handle daily trading and in billions of shares. Member organizations get faster order handling and associated reports to their customers, along with speedier and enhanced market information. They also have a regulatory environment, which assures member organiztions that their customers, large and small, can trade with confidence. Technology also allows lower costs, despite increasing volumes and enhanced products. Companies listed on the NYSE are provided with an electronic link so they may analyze daily trading in their stock, and compare market performance during various time periods. The technology also supports the visibility of operations and information, and regulated auction-market procedures, which listed companies expect from their"primary" market in support of their capital-raising activities and their shareholder services. Institutions get enhanced information flow from the trading floor, using new wireless technologies, as to pre-opening situations, depth of market, and indications of buy/sell interest by other large traders. Also supported are the fair, orderly, and deeply liquid markets which institutions require in order to allocate the funds they have under management whether placing orders in size for individual stocks (block orders) or executing programs (a series of up to 500 orders usually related to an index). For institutional investors, technology gives information on timely trades and quotes and makes them available through member firms, market data services, cable broadcasts and news media. They also are provided with a very effective way of handling "smaller" orders, giving them communications priority and full auction market participation for "price improvement" yet turning the average market order around in 22 seconds. Price continuitity and narrow quotation spreads, which are under constant market surveillence and a regulatory environment which enforces trading rules designed to protect "small investors" are also supported. There are many different kinds of equipment used on the stock market. One of these machines is SuperDot, an electronic order-routing system through which member firms of the NYSE transmit market and limit orders directly to the trading post where the