The Potential of Automated Futures and Options Markets

Abstract

Automation has for many years contributed to the informed and orderly operation of futures and options markets. Until recently technology was principally applied in the front office for dealer support and in the back office for the accounting of transactions and portfolio management. Traditionally the execution of trades has been conducted at exchange venues which provide a central market arena for human contact. The automation of the traditional trading floor has been a subject for debate for some time. Recent advances in technology have shifted the debate from the technical viability of automation to the method and structure of such an approach. There are few who now would argue against the inevitability of exchange automation, the arguments relate essentially to how and when.