1. BE653 Disruption in the markets 2016 David Norman

2. How has technology disrupted markets?
Market infrastructure design
Exchanges, ECN’s and MTF’s
Traders and Market makers
High Frequency trading (HFT) and Dark Pools
Neuroscience and Human-machine Interaction (HCI)

3. A Timeline in the development of markets
1986/1987 – London ‘Big Bang’ + Crash
1990- Central Limit Order Book
Regulation ATS
LIFFE closed
ISE and ICE –New York and Atlanta
High Frequency Traders and Market Makers
Regulation NMS and SEC Rule 610
Dark Pools and Crossing Networks
HFT’s on Steroids
Banking scandals – LIBOR, etc
May 6th Flash Crash
2012 – August 1st Knight Trading loses $440 Million
2013- Jan 3rd 2013
Regulators Bite -Ban Cancelled Orders

4. Where it all began LSE

5. The FTSE PIT 1990

6. Order Execution - First in First Out
FIFO definition
Central Limit Order Book
Scalping
Locked Markets and backwardations

7. The Central Limit Order Book

8. The Arena

9. Dark Pools, Crossing Networks and Systematic Internalizers
By 2012 the US Equity Market ‘Arena’ had 13 exchanges and 50 Alternative Trading Venues
REG NMS tried to link the system together
Chaotic with system Outages

10. Market Outage Jan 3rd 2013 NASDAQ

11. Inherent Volatility

12. Paralysis by Analysis

13. Can we restore a sense of Normality?
Who do the markets serve?
Who benefit most from the markets?
What are the ethical considerations?
Where does the human trader fit in?