Computerization of the Equity, Foreign Exchange, Derivatives, and Fixed Income Markets
Texas Tech University
CUHK Business School, The Chinese University of Hong Kong; University of Michigan at Ann Arbor - Ross School of Business
University of California, Riverside
Lehigh University - Department of Finance
January 10, 2013
The Financial Review, Forthcoming
We survey empirical studies on the development and effects of increased computerization across equity, foreign exchange, derivatives, and fixed-income markets. While the changes in the trading process due to computerization in less liquid markets such as the corporate bond market have been modest, there have been dramatic changes in certain derivatives markets, foreign exchange, and in particular equity markets. In many instances, previous research has found positive effects of computerization on measures of market quality, but our survey highlights that human intermediation is still prominent and beneficial in certain areas.
Number of Pages in PDF File: 18
Keywords: automation, electronic trading, computerized trading, human intermediation
JEL Classification: G1, G2
Date posted: July 28, 2010 ; Last revised: August 9, 2015
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