COMPUTERS AND THE STOCK MARKET This research co

How Computers Have Been and Continue

Computer technology was introduced into the stock market initially to perform number crunching activities associated primarily with recording and reporting market operations. These initial applications were valuable, and continue to be valuable. The introduction of new technology is one of the means by which productivity may be increased (Wright, 1989). New technology tends to lower production costs and increase profitability over the long-term, and is, thus, indispensable in the context of growth.

The introduction of computer technology into the stock market has enabled brokers and exchanges to utilize available human capital in more productive ways (Vosti, 1989). Computer technology, is, in effect, assisting the stock market to eliminate limits to growth.

The applications of computer technology in the stock market have progressed well beyond number crunching activities. One of the most significant of the current applications is decision-making (Clark, 1989). It is often held that the most productive manager or operator is one who has a minimum number of decisions to make (Gortner, 1986). This assertion does not mean that managers and stock traders should not make decisions. Rather, it means t

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o consider both tangible and intangible factors within a single decision-making model, and to select the alternative which provides the best balance between all factors. Applications of computer technology are also changing the international character of the stock market (Cap, 1989). Advanced technology has made possible instantaneous financial transactions on a worldwide basis. The growth of significant financial markets in Asia, as a complement to those in Western Europe and the United States has created a demand for 24-hour per day, seven-day per week trading. Initially, major investment banks in the three world regions offered their services to investors in each of the other regions through this advanced technology, during the normal hours of operation in their home countries. This strategy was soon followed by the creation of subsidiary investment banking firms in each of the other regions, a strategy which enabled those investment banking firms taking such action to deal on virtually a 24-hour per day basis. On 20 May 1991, the Securities and Exchange Commission (SEC) approved a two-year experiment, during which the New York Stock Exchange will remain open beyond its normal four P.M. Eastern Time closing. The SEC act
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Approximate Word count = 1697
Approximate Pages = 7 (250 words per page)

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