Where Could The Structure Of The Markets Be Headed?

Global markets have evolved a great deal in recent decades and become increasingly complex. In a new report, Firm58 took a close look at how markets have changed and where they’re headed in coming years.

Prior to 1995, a handful of markets – including the NYSE, AMEX, NASDAQ, CBOE and the CME – dominated the trading world. These markets were all highly-controlled and trades were nearly entirely executed on a trading floor.

Today, the digitization of global markets and the proliferation of high-frequency trading have made the pre-digital model look like a relic from the Stone Age.

In fact, according to Firm58, trading platforms have now begun the process of dialing back some of the complexity of their operations.

“With more accurate and sophisticated execution fee management, firms can start to identify the total cost of a potential trade, routing deals more efficiently and passing savings on to clients,” the report read.

Related Link: Are You Smarter Than A Quant Analyst? Check Out This Quiz And Find Out

By eliminating unnecessary complexities, Firm58 believes that firms can reduce cost and better compete in an increasingly competitive environment.

“Going forward, firms will be forced to focus on gaining a competitive advantage by rooting out inefficiencies, particularly around trade routing and back-office processes.”

Incredibly, Firm58 noted that the NYSE and Nasdaq Inc NDAQ’s trading market share has dropped from 80 percent in 2001 to only 24 percent as of 2015.

Disclosure: The author holds no position in the stocks mentioned.