Information Technology and Financial Markets: Risk, Volatility and the Quants

Information Technology and Financial Markets: Risk, Volatility and the Quants

Donald Crooks (Wagner College, USA), John Slayton (Trust Company of the South, USA) and John Burbridge (Elon University, USA)
DOI: 10.4018/978-1-61350-162-7.ch001
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Much has been written about information technology and its role in reinventing financial markets. Today’s markets are truly global, and the interconnectedness is the result of information and communication technologies (ICT) providing the necessary infrastructure. A financial crisis in any part of the world can cause widespread disruptions due to this interconnectedness. Clearly, the Asian crisis in the late 1990s, the sub-prime mortgage loan issues in 2006 and 2007, and the problems occurring in Greece and the U.S. “Flash Crash” in 2010 were exacerbated by the ability of technology to allow financial markets to instantaneously respond in a negative fashion.
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What is known today as the New York Stock Exchange (NYSE) came into existence in 1792, when a group of 24 men signed the “Buttonwood Agreement” under a Buttonwood Tree which stood just outside where the NYSE now sits on Broad Street in New York City (Wright, 2002, p. 11). Today the Buttonwood tree is still the symbol of the NYSE. In those early days of trading, less seasoned stocks were relegated to being traded in areas by the horses’ hitching post or the curb. These stocks were later morphed into the American Stock Exchange (ASE), which was originally known as the New York Curb Exchange or ‘The Curb’.

Information technology first came to the NYSE during the 19th century, with the arrival of the ticker in 1867 and the installation of the first telephone in 1878 (Mehta, et. al, 2010, pgs. 50-51). The ticker, which became symbolic of Wall Street, was invented by Edward A. Calahan and delivered the latest stock prices to investors removed from Wall Street. The reach of the NYSE had been extended.

The NYSE grew consistently in stature and size throughout the 20th century, but in a controlled fashion. The 20th century also saw the NYSE endure its greatest crisis, the stock market crash of 1929 and the great depression. A major development which grew out of the great depression was The Securities Exchange Act of 1934, which established the Securities Exchange Commission (SEC) to oversee Wall Street, the NYSE and other exchanges. The market did not return to 1929 pre-crash levels until the 1960s.

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Editorial Advisory Board
Table of Contents
Alexander Y. Yap
Chapter 1
Donald Crooks, John Slayton, John Burbridge
Much has been written about information technology and its role in reinventing financial markets. Today’s markets are truly global, and the... Sample PDF
Information Technology and Financial Markets: Risk, Volatility and the Quants
Chapter 2
Alexander Y. Yap
Trading anytime anywhere ubiquitously is rapidly becoming a popular trading practice in the financial marketspace. When highly volatile financial... Sample PDF
Trading Anytime Anywhere with Ubiquitous Financial Information Systems
Chapter 3
Michael Kampouridis, Shu-Heng Chen, Edward Tsang
In a previous work, inspired by observations made in many agent-based financial models, we formulated and presented the Market Fraction Hypothesis... Sample PDF
The Market Fraction Hypothesis under Different Genetic Programming Algorithms
Chapter 4
Xiaotie Deng, Feng Wang, Keren Dong
Algorithmic trading strategy making is a very important research issue which attracts more and more people’s interests. This chapter will introduce... Sample PDF
Algorithmic Trading Strategy Making: Algorithms and Applications
Chapter 5
Alexander Y. Yap, Wonhi Synn
This chapter focuses on the theme of service innovation in the electronic brokerage sector. The discussion will cover the theories of “technology... Sample PDF
Technology Bundling: Innovation for Online Brokerage Services
Chapter 6
Robert P. Schumaker, Hsinchun Chen
However, using computational approaches to predict stock prices using financial data is not unique. In recent years, interest has increased in... Sample PDF
Predicting Stock Price Movement from Financial News Articles
Chapter 7
Joe Kelley
Virtual reality offers the promise that finally, most of the capabilities of the human mind and senses can be harnessed to improve global financial... Sample PDF
Virtual Reality Support for Trading
Chapter 8
M. Kersch, G. Schmidt
Trading decisions in financial markets can be supported by the use of trading algorithms. To evaluate trading algorithms and to generate orders to... Sample PDF
Survey of Trading Systems for Individual Investors
Chapter 9
Joe Kelley
We sketch a large-scale computable general equilibrium model of the macroeconomy that includes modern features such as financial derivatives. This... Sample PDF
Grid Super-Computable General Equilibrium Models
Chapter 10
Seán O’Riain, Andreas Harth, Edward Curry
With increased dependence on efficient use and inclusion of diverse corporate and Web based data sources for business information analysis... Sample PDF
Linked Data Driven Information Systems as an Enabler for Integrating Financial Data
Chapter 11
Roger F.A. van Daalen
The move towards electronic trading was believed by some to narrow the scope of information available to traders, due to the difference between the... Sample PDF
The Persisting Human Element of the Electronic Trading Habit
Chapter 12
Joe Kelley
We present an extensive dynamic financial model that encompasses most models used today in finance and economics. We show that this model is a good... Sample PDF
DSP Acceleration for Dynamic Financial Models
Chapter 13
Joe Kelley
We propose to use FPGA (Field Programmable Gate Arrays) to solve the nearly insurmountable computational challenges of Financial Network Models.... Sample PDF
FPGA Speedup for Financial Network Models
Chapter 14
Alma Lilia Garcia Almanza, Serafín Martínez Jaramillo, Biliana Alexandrova-Kabadjova, Edward Tsang
The main advantage of creating understandable rules is that users are able to interpret and identify the events that may trigger bankruptcy. By... Sample PDF
Using Genetic Programming Systems as Early Warning to Prevent Bank Failure
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