17 March 2018
Matt White

Matt White

Matt White - Finextra

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In an electronic world, the trading floor still has a place

20 August 2009  |  2806 views  |  2

Over at Seeking Alpha, Ray Pellecchia from Nyse offers a nice little lesson on the dangers of putting all your eggs into the e-trading basket.

A couple of days ago, before the market opened, a customer sent thousands of orders in a lightly traded stock by mistake. If the Nyse operated a purely electronic market the orders would have sailed through, leaving a fair amount of mess to clear up.

But because the exchange has a physical trading floor, the error was spotted by an eagle-eyed designated market maker. The opening was held while the customer was contacted and the order cancelled.

Traditional exchanges are facing fierce competition from all-electronic rivals on both sides of the Atlantic. These new kids on the block have taken significant market share by offering low prices and low latency but technology can't do everything and the human touch still has its place.

TagsTrade execution

Comments: (2)

Iosif Itkin
Iosif Itkin - Exactpro part of London Stock Exchange Group - Moscow | 21 August, 2009, 17:51

I think technology can do it. An advanced electronic surveillance system should be responsible for spotting such anomalies, alerting market control and enabling them to take appropriate actions.  The question is whether solutions that are currently available satisfy these requirements

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Anthony Cossey
Anthony Cossey - Fixnetix ltd - London | 24 August, 2009, 10:50

let's not forget the open outcry system is also open to abuse by the floor traders.......somewhat of a double edged sword.

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