A strategic analysis of electronic marketplaces
MIS Quarterly - Special issue on the strategic use of information systems
Information technology and screen-based securities trading: pricing the stock and pricing the trade
Management Science - Special issue: Frontier research on information systems and economics
Next-generation trading in futures markets: a comparison of open outcry and order matching systems
Journal of Management Information Systems - Special section: Strategic and competitive information systems
Impacts of the electronic marketplace on transaction cost and market structure
International Journal of Electronic Commerce - Special section: Diversity in electronic commerce research
Adoption of electronic trading at the International Securities Exchange
Decision Support Systems - Special issue: Economics and information systems
Hi-index | 0.00 |
The rapid development of information technology has changed the dynamics of financial markets. The main purpose of this study is laid on examining the role of IT based stock trading on financial market efficiency. This research specifically focused on algorithmic trading. Algorithmic trading enables investors to trade stocks through a computer program without the need for human interventions. Based on an empirical analysis of the Korean stock market, this study discovered the positive impact of algorithmic trading on stock market efficiency at three-fold. First, the study results indicate that algorithmic trading contributes to the reduction in asymmetric volatility, which causes inefficiency of information in a stock market. Second, an algorithmic trading also increases the operation efficiency of a stock market. Arbitrage trading contributes on the equilibrium between the spot market and futures market as well as on the price discovery. Third, algorithmic trading provides liquidity for market participants contributing to friction free transactions. The research results indicate that stock exchanges based on electronic communications networks (ECNs) without human intervention could augment a financial market quality by increasing trading share volumes and market efficiency so that it can eventually contribute to the welfare of market investors.