Automated Trading Systems (vs Floor)

Automated Trading Systems (vs Floor)

1. Fairness

   • Operational superiority compared to floor trading
     • Trading scandals on floors in highly active periods
   • Fair access to markets compared to floor trading

2. System Capacity

   • Matching technologies are more scalable
   • 24 hr globally linked trading possible

3. Negotiation Speed

   • Transactions completed faster and more efficiently
   • Oral trading is faster for negotiating trade sizes

4. Exchange of information

   • Floor trades provide more information about counterparties
   • Floor trading can establish intent of parties and know people who may want to trade
   • Electronic trades limit the growth of order size (adverse selection)

5. Transparency

   • Faster market data reporting to the public
   • More accurate reporting

6. Cost

   • Reliable
   • Secure
   • Fast
   • Lower operating costs
   • Less labour intensive
   • High development costs

7. Immediacy

   • Open outcry can cancel orders faster

8. Liquidity

   • Largest open outcry exchanges are highly liquid
   • Electronic trading may be more liquid (not yet proven)