Computerization of the Equity, Foreign Exchange, Derivatives, and Fixed‐Income Markets

13 Pages Posted: 8 Apr 2014

See all articles by Laura Cardella

Laura Cardella

Texas Tech University

Ivalina Kalcheva

University of California, Riverside

Yung-Yu Ma

Lehigh University - Department of Finance

Jia Hao

Babson College

Date Written: May 2014

Abstract

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 particularly in 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.

Keywords: automation, electronic trading, computerized trading, human intermediation

JEL Classification: G1, G2

Suggested Citation

Cardella, Laura and Kalcheva, Ivalina and Ma, Yung-Yu and Hao, Jia, Computerization of the Equity, Foreign Exchange, Derivatives, and Fixed‐Income Markets (May 2014). Financial Review, Vol. 49, Issue 2, pp. 231-243, 2014. Available at SSRN: https://ssrn.com/abstract=2422132 or http://dx.doi.org/10.1111/fire.12033

Laura Cardella (Contact Author)

Texas Tech University ( email )

Lubbock, TX 79409
United States

Ivalina Kalcheva

University of California, Riverside ( email )

900 University Avenue
Riverside, CA 92521
United States

Yung-Yu Ma

Lehigh University - Department of Finance ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

Jia Hao

Babson College ( email )

Babson Park, MA 02457-0310
United States

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