30 Years Of Changes To Stock Market Technology
Starting as early as 1698, share prices were circulated bi-weekly on a 10x4 inch sheet of paper. Traders would bellow orders to each other, and assemble around the stock trading area, yelling like they were in the middle of a bar brawl, when stock traded on the strength of a news story.
Skip forward to 1986 and the shouting was replaced by brokers buying and selling through the Stock Exchange Automated Quotation System. No longer would traders have to meet face to face thanks to the Big Bang of 1986.
Robin Paine, chief technology officer at the London Stock Exchange commented "It brought significant benefits to both institutional and private investors, with private investors gaining low-cost independent access to the market through the proliferation of new services."
1987 was also a noticeable year for the stocks, but not in such a positive manner as 1986, partly due to the introduction of immature technology during the previous year. Referred to as Black Monday, stock markets crashed on October 19th 1987, where huge value was overturned in a very short amount of time.
20 years ago
The 1990’s saw the rise in the use of internet and dot com companies.
However due to lack of people owning a PC and the new concept of buying online being surrounded by mistrust, the dot com bubble popped. Some companies like Amazon.com, Inc. (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) were able to ride it out, though other businesses such as boo.com weren’t so lucky and went into receivership after expenses reached £100 million in only 6 months!
10 Years ago
The Stockholm, Copenhagen, Helsinki, Iceland, Tallinn, Riga and Vilnius exchanges integrated to become The Nordic Exchange in 2006. Operated by OMX, the Nordic Exchange has a technology arm that develops technology for the exchange as well as licensing technology to others.
The London Stock Exchange activated its Technology Roadmap in 2003. After four years, TradElect, the exchange's all-singing, all-dancing core trading platform, was launched in 2007. Two years later the LSE decided to switch to another platform and acquired the company, MillenniumIT, who had an existing system.
The European Union's Markets in Financial Instruments Directive (Mifid) introduced more competition in the stock trading sector around 2007. Mifid has bound EU nations to remove the concentration rule that states that all trades must go through local exchanges. Boat and Turquoise were created to offer trade reporting and execution facilities respectively on the back of Mifid.
Algorithms were introduced into the markets, which revolutionised the way stock traders choose what stocks to buy and sell. However this has also caused “flash crashes”, where stocks plummeted and rebounded in a short amount of time. The May 6, 2010 flash crash lasted for roughly 36 minutes and further Flash Crashes occurred in 2015, the main ones happening on March 18 and August 24.
In 2011, at the London Stock Exchange TradElect was completely replaced with Millennium Exchange, and both te Oslo and Johannesburg Stock Exchanges also switched to the Millennium Exchange.
2016 will bring further changes to the stock markets and with Britain voting to leave the EU, the London Stock Exchange will be in full control of the UK once more, rather than influenced by Mifid.
Gemma Baker is the Marketing Executive for UK live chat for website provider, Click4Assistance, with a previous background in finance and knowledge in technology systems.
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