The stock exchange becomes digitalized while trading floors empty
Digitalization has become ingrained in our daily lives reaching the most distant corners as we never imagined. The stock market has also jumped onboard
The iconic images of people overcrowding global stock market trading floors are increasingly disappearing. Digitalization has forced the most well known brokers to move to other centres where there they focus their market activities.
The appearance of the first online brokers
“The emergence of numerous trading platforms has resulted in a significant risk to stock markets, which has cemented television sets as symbolic centers more than their practical counterparts. Today, work is done in front of screens. From the trading desk at home, making use of an iPad, or a mobile phone, the work of the trader has transformed into something “isolated”, says Gisela Turazzini, CEO of Blackbird, an online broker.
If we take a look at the world of stock trading, there is no doubt that the first thing to do was to put an end to the market trading floors, which during the last century reached the height of their popularity.
In 2000 the first online brokers emerged. As a result, trading floors emptied. Training became fasterand professionals began to work ina field, that for the first time, allowedthe small time investor to operatein themarket.
Nowadays, the growth of online brokers is changing steadily, and their challenge now is to position themselves at the client’s side, not against them. Investors are increasingly more informed andprepared. Furthermore, there is a unique level of trade that usually takes place at a higher level than that of the professional. Without a doubt, this is allthanks to “digitalization”, affirms Turazini.
A Robotic Stock Exchange
The image of the New York Stock Exchange conjured up from, for example, the film Wall Street, has little to do with its real life counterpart. Most of the investments made from the other side of the Atlantic are carried out automatically. In fact, the buying and selling of bonds and passive handling is done by trading “robots”.
Predatory Robots in markets
Today, there are personal computers are responsible for making millions of decisions that affect both the global economy and private finance by the second. The reality is these are computer algorithms operating in a matter of milliseconds.
The article Abrupt rise of new machine ecology beyond human response time published in Nature magazine says that humans take about a second to react to risk.
There fore these algorithms are able to react in a millisecond, or at a rate 1000 times faster than a human being.
According to the study which came to light, between January 2006 to February 2011, more than 18,000 drastic actions were registered in stock markets in less than one and a half seconds.
Although this figure might appear surprising, experts predict that it will continue to rise going forward. This system of algorithms has invaded our lives and yet is still full of mystery.
The situation in Madrid
Do you miss the tobacco smoke, the screams of brokers or the sound of telephone calls permeating the central Stock Exchange in the Spanish capital? In 2006, Bolsas y Mercados Españoles (BME) gathered four Spanish Stock Exchange centers and moved their headquarters to Las Rozas (Madrid).
Most stock market activity takes place in a structure of 11,000 square meters, and every day it becomes less stressful. The symbolic palace is reserved for institutional events and for those who want to see the architecture designed by architect Enrique María Repullés y Vargas.