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Research Outline

Prepared for Mat | Delivered December 10, 2019

Stock Market Technology

Goals

To understand the technology required to run a stock market.

Early Findings

  • While not exactly a stock market itself, some similar principles will apply. The technology needed to run a trading platform includes: authorization system, user page to manage personal data, view/edit data interface, payments and transactions mechanisms, newsfeeds, real-time tracking, deposits, quote monitoring, search, analytics, sorting/filtering and push notifications.
  • The NYSE and several other major stock markets use an auction-based system to trade. Therefore, the relevant technology would need to support this 'bidding' system for direct buyer-seller relationships.
  • The NYSE uses actual humans on the trading floor, so the technology would look quite different than another stock market type.
  • However, NASDAQ (and others) use a dealer market. A system would need to support these market-makers listing prices to facilitate buying and selling between the relevant parties. All trading is done electronically from no particular location.
  • NASDAQ uses the Small Order Execution System to automatically execute traders under 1,000 shares.
  • Its backend technology is essentially broken down into 3 components: the interface, the matching engine and quote services. The matching engine is apparently a single, high-powered computer.
  • The London Stock Exchange uses a system called the Millennium Exchange. The system is Linux-based and runs on commodity Intel hardware.
  • There are reportedly about 20 trading platforms in use in Europe.
  • The Tokyo Sotck Exchange recently announced it was upgrading its "arrowhead" trading system in partnership with Fujitsu.