How Technology Changed Wall Street
Blockchain is often portrayed as a disruptive technology since it has the ability to allow transactions to take place directly, without the need for a "middleman". This reduces the number of entities involved in completing a transaction. It also reduces the cost.
This is a constant for technology. It is why it is a deflationary aspect of our society. Over time, when technological progress is made in a certain area, we see two things happen. The first is, obviously, costs go down. Secondly, we witness productivity going up.
The financial sector realized this long ago. We saw automation enter this industry and cause massive disruption. Trading today does not resemble what it looked like 30 years ago. This is true from how orders are placed to who actually conducts them.
One of the best ways to advance is to get rid of humans. That might sound cold yet that is how it works. For banks that handled trading, they found this to be the case. Floor traders are down by more than 90% compared to where they were decades ago. This is a trend that is not stopping, seeing the same thing happen over the last decade.
What is interesting is that the entities that handle trading are starting to suffer greatly. It is likely that the biggest banks in the world are going to exit the trading sector. This was a thought that was absurd 20 years ago yet here we are.
The challenge with all the technology the banks put in place is that it kills margins. Without the money generated from high-margin trading, the net effect is profitability suffers. This was the case both for those working in trading departments along with the entity.
This video does a great job showing the progress of Wall Street trading and how it changed over the years. The takeaway from this is that there is no better time to be engaging with the markets from this perspective. Costs are way down and the information available to each person (and the collective whole) is enormous.
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Posted via Steemleo
