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The Future of the Financial Exchanges by Herbie Skeete

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Chapter 3. Regulation Is Affecting Trade through Settlement

Price and Quantity Discovery

We ended Chapter 2 with the words: “It's not all about technology.” Yet the technological advances that have given us automated trading and that have enabled an epic transformation of the financial exchange landscape continue to press forward, raising issue after issue about how the markets function in the new environment.

Two questions arise about the financial exchanges and how they have evolved and continue to evolve concerning discovery mechanisms—questions of prices and of quantity.

Price discovery is the process of determining the price level for a commodity based on supply and demand conditions in the marketplace, whether it is a cash market or ...

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