Question

Think about the impact of technology on financial markets. Discuss some examples of the latest technological advances in financial market instruments. Be sure to include both money market and capital market instruments. Are there technological advances (whether in trading or pricing or listing) in financial markets and instruments, that exist in other countries, and which have not been implemented in the United States?  Discuss these advances.

I am going through "writer's block" with my paper. Unsure what else to discuss. Any help is appreciated.

Answer 1

The Impact of Technology on the Stock Market

There was a time when boisterous traders at the New York Stock Exchange yelled out orders to each other, creating a raucous din. When a stock traded on the strength of a news story, traders gathered in the stock's trading area and started shouting matches that sounded like brawls. Today's high-tech trading goes on without the shouting, and offers investors efficient ways to research and purchase stocks.

There is a new technology making waves in the financial markets. And while the name – distributed ledger technology, or DLT – might sound technical, some say it has the potential to completely change the way the financial markets and banking work. So what exactly is it and why is it important to central banks Many institutional investors, such as mutual funds, hedge funds and pension funds, use programs to buy and sell stocks. This can result in a sudden sell-off or purchase of stocks, because the program has a specific date and time to make the trade. Investors can be fooled by the sudden volume. In addition, some institutional investors experience technology glitches that can trigger sudden buying and selling. These events can put traders in a panic, because they see no news to justify the trades, and assume that they should buy or sell the stock so they can be in on the action.

According to the Securities and Exchange Commission, investors have unprecedented access to information about companies and their stocks. The Internet provides current stock prices, company earnings reports, and breaking news about stocks and the companies issuing those stocks. Financial advisers can relay current developments to their clients, and companies can track the performance of their stock in real time. The result of this nearly instantaneous information is better-informed investors, traders and advisers.

Company mputer systems record buy and sell orders so quickly that investors can know their price and other details within seconds. In addition, because electronic trading eliminates handling of transactions by people, errors have become infrequent. Though the long-established standard of three days remains in effect for verification that money has changed hands and the shares have been recorded in the buyer's account, in practice, electronic trades accomplish all of that in seconds.

CONCLUSION

This short article discusses some important consequences if the emergence of the Internet as a global communications network. The Internet facilitation of information flows smoothes competitive frictions, intensifies competition, and promotes a winner-taker most world.

The Internet threatens firms, markets, processes. systems,exchanges, and supply and distribution mechanisms that have this far been protected from global and intense competition behind national borders, regulatory rules, or geographic locations. The Internet brings financial markets even more force-fully into a regime of intense competition and very significant inequality a winner-takes-most world with a very intense race for the winner and with significant benefits for market particeipants.

The Internet has been full of surprises. These include

Its very rapid commercialisation and expansion.

the emergence of the Internet browser as a must-have"killer"application in 1994-95,

the world-wide fast expansion in the use of electronic mail,

the huge success of live text-based multi-party chat, and

the emergence of Napster as 6% of all Internet traffic inthe fourth quarter of 2000, among others.

The nature of the Internet is sucH that it holds a tremendous promise of new processes, goods, and services. Thus,despite the careful analysis above, I would venture to say that the Internet application and use that would become the most prominent in the next ten years is likely not yet conceived and it's impact is unanticipated. On the Internet, expect the unexpected, and you will likely be pleasantly surprised!