Electronic Trading in Stock Markets

Journal of Economic Perspectives, Vol. 20, No. 1, Winter 2006

31 Pages Posted: 1 Jun 2006

See all articles by Hans R. Stoll

Hans R. Stoll

Vanderbilt University - Finance

Abstract

In this article, I examine how electronic trading has altered stock markets. I begin with an overview of how the stock trading process works and then address a number of questions. How have the jobs of traditional stock market dealers on the NYSE and on Nasdaq been affected by electronic trading? How do electronic communications networks differ from traditional markets? How has electronic trading affected bid-ask spreads and commission costs? What subtle issues arise in electronic trading when dealer and customer interests diverge? Will computer programs replace human judgment? What is the effect of electronic trading on the number and types of securities markets? What is the role of regulation in electronic markets?

Keywords: stock markets, ECN, bid-ask spreads

JEL Classification: G14, G20, G24, G28

Suggested Citation

Stoll, Hans R., Electronic Trading in Stock Markets. Journal of Economic Perspectives, Vol. 20, No. 1, Winter 2006, Available at SSRN: https://ssrn.com/abstract=905614

Hans R. Stoll (Contact Author)

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States
615-322-3671 (Phone)
615-343-7177 (Fax)

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