
How Computers Took Over Trading - jonbaer
http://www.bloomberg.com/news/2013-08-22/how-computers-took-over-trading.html
======
yuliyp
What exactly do computerized record processing systems have to do with
algorithmic trading, besides that both use computers to do the actual
processing necessary?

~~~
cabacon
I don't know, even the non-HFT side of computers in trading is interesting. I
looked at
[http://raudys.com/kursas/2002%20Trading%20and%20exchanges.pd...](http://raudys.com/kursas/2002%20Trading%20and%20exchanges.pdf)
the other day, which is a set of chapter-excerpts from "Trading and
Exchanges". It was a great read in a "Here's how the sausage is made" kind of
way. It offered a very pragmatic overview of how and why things are the way
they are; it certainly enticed me into getting the full book.

~~~
seewhat
A piece of trivia: "Bernard L. Madoff Investment Securities" is listed as a
well-known example of a sell-side dealer (the publishing date is 2002).
Understandably, some other firms no longer operate under their listed names.

------
smoorman1024
The title from Bloomberg is misleading and the others here are correct to say
that this is more a history of Electronic Clearing. That said, Electronic
Clearing does allows for increased automated interaction with the exchange
spinning off everything we think of today as Electronic Trading(think HFT
algo-prop trading, dark pools, reg NMS, etc.).

Bloomberg could have also arbitrarily picked ticker tape as an example of how
computers (or just technology for that matter) took over Trading. Its a
natural progression in a highly competitive industry where speed of
information is an essential edge.

It would be more poignant to analyze how Reg NMS came to be and what effect
that has on the market.

Also consider the financial incentive that the exchanges are in as electronic
trading has become prevalent. More trades me more commissions. The exchanges
WANT higher volumes and more churn. Take what the exchange operators say with
a grain of salt.

------
joosters
It was interesting to read a little about how trades were settled prior to
electronic records. Everyone seems to assume things worked fantastically
before our stock exchanges were computerised, yet the errors and screw-ups
were still there.

~~~
mikestew
And yet it still takes three days to settle a trade (and practically, to put
money in my pocket). There may be some rule that dictates this, but it's not
like we are sending couriers over with stock certificates anymore.

------
mathattack
There are lots of stories of brokerage firms buckling under the paperwork.
Outsiders like Ross Perot and Warren Buffett were brought in to help manage
some of the messes. One of the problems of the MBS/Foreclosure crisis is
tracking down all the physical paperwork.

