Upheaval and Work
Traders Magazine, November 2001
The institutional equities business is about to meet a powerful force called disaggregation. And it won't be pleasant. Disaggregation, a process that has repeated itself time after time in the financial services industry, a process in which technological change is met by an open regulatory environment, occurs when a financial product or process breaks down into its value-added components. The forces of disaggregation - technology, capital and regulation - are evident in the institutional equities business. The technological catalyst is the introduction of second generation automated execution systems. SuperDOT, which handles about 90 percent of orders arriving electronically on the NYSE, is being supplemented by the new Common Access Point (CAP) on the New York Stock Exchange. However, this flood of data is still squeezed through 9,600-baud modems, a system that was state-of-the-art back in 1986, but is now hopelessly out of date. Although still only utilized by less than a dozen brokers and two vendors, CAP provides trading access with modern bandwidth.
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