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Electronic Bulls and Bears: U.S. Securities Markets and Information Technology

Electronic Bulls and Bears: U.S. Securities Markets and Information Technology

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Published by Chris Nash
U.S. securities markets have been changed by strong social, technological, economic, and political trends over the past two decades. During the 1970s automated systems were put in place, institutions emerged as dominant investors, new kinds of financial instruments began to trade, and Congress passed landmark legislation encouraging greater competition among markets. In the 1980s securities and futures markets became linked through new financial products and computer-assisted trading strategies. The decade of the 1990s will bring still greater challenges for the markets, their regulators, and congressional oversight committees, as foreign competition becomes intense and electronic trading systems mature.

The world is moving toward electronic around-theclock and around-the-globe securities trading. These challenges will require strong efforts to maintain efficiency and fairness and to meet the needs of domestic and foreign investors. The ability of U.S. markets to compete with foreign counterparts is becoming critical. The U.S. regulatory structure will have to maintain and protect essential domestic policy objectives in an environment buffeted by change. The regulatory structure, designed for yesterday’s markets and assets, may not be up to tomorrow’s tasks. New or revised legislation may become necessary. The private sector cannot achieve, without government assistance, some of the necessary adjustments to keep American markets strongly competitive and to protect American investors and financial systems.
U.S. securities markets have been changed by strong social, technological, economic, and political trends over the past two decades. During the 1970s automated systems were put in place, institutions emerged as dominant investors, new kinds of financial instruments began to trade, and Congress passed landmark legislation encouraging greater competition among markets. In the 1980s securities and futures markets became linked through new financial products and computer-assisted trading strategies. The decade of the 1990s will bring still greater challenges for the markets, their regulators, and congressional oversight committees, as foreign competition becomes intense and electronic trading systems mature.

The world is moving toward electronic around-theclock and around-the-globe securities trading. These challenges will require strong efforts to maintain efficiency and fairness and to meet the needs of domestic and foreign investors. The ability of U.S. markets to compete with foreign counterparts is becoming critical. The U.S. regulatory structure will have to maintain and protect essential domestic policy objectives in an environment buffeted by change. The regulatory structure, designed for yesterday’s markets and assets, may not be up to tomorrow’s tasks. New or revised legislation may become necessary. The private sector cannot achieve, without government assistance, some of the necessary adjustments to keep American markets strongly competitive and to protect American investors and financial systems.

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Categories:Types, School Work
Published by: Chris Nash on Jul 26, 2008
Copyright:Attribution Non-commercial

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05/09/2014

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 Electronic Bulls and Bears: U.S. Securities Markets and Information Technology
September 1990
OTA-CIT-469NTIS order #PB91-106153
 
Recommended Citation:
U.S. Congress, Office of Technology Assessment,
Electronic Bulls & Bears: U.S. Securities
 Markets & Information Technology, OTA-CIT-469
(Washington, DC: U.S. GovernmentPrinting Office, September 1990).For sale by the Superintendent of DocumentsU.S. Government Printing Office, Washington, DC 20402-9325(order form can be found in the back of this report)
 
Foreword
Communication and information technologies—the telegraph, then ticker tape, tele-have historically played important roles in structuring andphones, and now computers—improving the operation and performance of securities markets. In 1975, Congress-realizingthe potential of computer and telecommunications systems for improving competitivenessamong U.S. securities markets and dealers-enacted the Securities Exchange Act Amend-ments. This Act sets forth goals for an electronically integrated ‘national market system’ thatwould lead to improved liquidity, higher efficiency, fairness to all domestic investors, andgreater attractiveness of U.S. markets to international investors.
This
report,
Electronic Bulls and Bears: U.S. Securities Markets and Information
Technology,
responds to requests by the House Committee on Energy and Commerce and the
House Committee on Government Operations to assess the role that communication and
information technologies play in the securities markets. The Committee desired a benchmark 
for gauging progress made toward the national market system envisioned by the 1975 Act.This report assesses the current use of information technology by U.S. securities exchangesand over-the-counter dealers, by related futures and options markets, and by associated
industries and regulatory agencies.
OTA characterizes the present U.S. securities markets as the most liquid, efficient, andfairest in the world, but still there are serious problems besetting or threatening the U.S.markets. Some of these problems result from the reluctance to accept and adapt technologies
that may threaten traditional roles and long-standing business relationships. Others are causedby the forces of information technology that now link securities, futures, and options markets
into a seamless web of transactions. There is also a mismatch between the capabilities of technology to link these markets and the fragmented jurisdictions of the agencies that arecharged with regulating them.Technology is a double-edged sword that must be used with care and skill. Informationtechnologies will never supplant human function and reason, but when properly and judiciously used they can help achieve the objectives of the 1975 Act.OTA thanks the Advisory Panel and the many workshop participants, contractors,
contributors, and reviewers who contributed to the report. All were unfailingly generous withtheir knowledge, judgment, and time in helping OTA in this assessment. OTA, of course, bears
sole responsibility for the contents of this report.
Director 

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