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to forever alter the way they conduct business. Imagine a world where the floor trader, trading at an electronic terminal, can't ''sense" the mood of the market by seeing the confusion in the eyes of his neighbors or hearing the panic in their voices? How does a technical CTA, who has always used daily open and closing signals to make his trading decisions, operate when the markets trade virtually around the clock? How does a Futures Commission Merchant (FCM) keep a 24-hour trading desk staffed with experienced operators capable of executing orders via electronic terminals, order-routing software and open-outcry pits in over 300 futures and options contracts worldwide? Three major changes will occur. More locals will adapt to electronic trading or leave the marketplace. The markets they trade and the hours they keep will no longer be set in stone. They will have to find new ways to gain an "edge" in the market. Brokerage houses and exchanges as well as all the supporting players, such as software and data vendors, will adapt their business models to support this. Central common meeting places will decrease in size, while upstairs electronic trading rooms will expand. Many brokerage firms are already providing traders with the facilities to trade the international markets via a PC rather than putting them on one of the exchange floors. The demand for this is growing as new generations of computer-literate traders are more comfortable with electronic order placement. |
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Neal: What does this mean for retail customers? |
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Andy: Retail customers must harness this newfound flood of information and power. Traders will have access to information from an array of sources. The brokers will give less advice and information but provide more interpretation of information and assume more risk and technology management. The exchange-broker-trader relationship will change as exchanges look to access the customers more directly, rather than relying on the brokerage houses. This will cause them to rethink their role and will lead to the growth of third-party software providers as endusers demand easier, more transferable interfaces, rather than |
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