Technology’s Effect on the Stock Exchanges
Financial trading at its inception was mostly uncomplicated. Money is exchanged between the creditor and the debtor. However, technology has had a major effect on the Stock Exchanges.
As recorded from the earliest trades, back in the 14th century, Venetian merchants began to trade government debt among themselves and at the Venetian councils. Government debt trading spread to Pisa and Genoa where citizens began buying government bonds from one city and state and selling to another. What transpired was a complex paper trail that thankfully morphed into what we now know as the Stock Exchanges. Initially the technology that affected financial trading was pen and paper and eventually the printing press which allowed the printing of certificates. While that was an excellent innovation, certificates still needed to be preserved, and produced to prove ownership as well as stored over the long term. There would again come a need for simplification and improvement. In came the Dutch who invented the modern stock exchange, the Amsterdam Bourse, the first to trade in specialized securities.
Technology Today
Telecommunications changed trading forever, first with the invention of the phone, then the computer and now the internet. Physical distance no longer limited the expansive possibilities of financial trading. One call to a broker opened a whole universe of securities buyers and sellers. A trade that might originally take days and weeks to settle, could be delivered within a few days.
Finally, the internet changed the securities game entirely. Not only in terms of time and possibilities, but it increased competition. At one time, financial institutions, banks and hedge funds, competed within their own sector and maybe with the government. Now, with the internet available to the public around the globe, anyone can access the stock market, which creates economic growth as well disruptors, equaling the playing field.
While the internet has been deemed the great equalizer, AI and sophisticated financial program are poised to be the most disruptive and innovative advancement in decades. Financial decisions are being made by robots. Sophisticated analytics programs and algorithms are allowing for the location of financial opportunities in mere seconds. The newest technological shake-up is fostering even more competition on a global scale. As with all innovative technology, it has its pros and cons. Although technology has made securities virtual and allowed for more global and immediate trading, it has also made the complex field of securities trading that much more complicated.
