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Publisher Summary This chapter briefly discusses the architecture of electronic trading. The components of the trade cycle for electronic trading and the history of its development, with examples of some key new players in the industry are also explained. With computers and network connection traders can trade anywhere in the world. The entire financial markets have seen unprecedented growth and collaboration between industry players to solidify the infrastructure and trading model while competing with each other with new products and ideas. These changes have enabled the creation of more new products, trading styles, and trading strategies that have given a facelift to the static world of floor trading. The benefits of electronic trading are tremendous. A trade touches many hands as it makes its way through the system. The simple act of buying or selling a financial instrument goes through a number of components to ensure that trades are executed, cleared, settled, and reported properly. The trade cycle from execution to settlement takes much less time because it is done without any manual support. Furthermore, the chapter also describes the technical structure of electronic exchanges, from client applications to exchanges to clearing services. |
