Origin[ edit ] Before the sixties or seventies, the banks ' capital market businesses were mostly split into many departments, sometimes scattered at several sites, as market segments: money market domestic and currenciesforeign exchangelong-term financing, exchange, bond market. By gathering these teams to a single site, banks want to ease: a more efficient broadcast of market information, for greater reactivity of traders; idea the best dealing center on market trends and opportunities; desk co-ordination towards customers.
Context[ edit ] Trading rooms first appeared among United States bulge bracket brokers, such as Morgan Stanleyfromwith the creation of NASDAQwhich requires an equity trading desk on their premises, and the growth of the secondary market of federal debt products, which requires a bond trading desk. The spread of trading rooms in Europebetween andhas been subsequently fostered by two reforms of the financial markets organization, that were carried out roughly simultaneously in the United Kingdom and France.
In the United Kingdom, the Big Bang on the London Stock Exchangeremoved the distinction between stockbrokers and stockjobbersand prompted US investment bankshitherto deprived of access to the LSE, to set up a trading room in the City of London. Every emerging market segment raised the need for new dedicated trader positions inside the trading room.
Businesses[ edit ] A trading room serves two types of business : portfolio managementa business of asset management companies and institutional investors, often referred to as the buy side. Brokers and investment banks set up their trading rooms first and large asset-management firms subsequently followed them.
The business type determines peculiarities in the organization and the software environment inside the trading room. Organization[ edit ] Trading rooms are made up of "desks", specialised by product or the best dealing center segment equities, short-term, long-term, options An investment bank's typical room makes a distinction between: traders, whose role is to offer the best possible prices to salesby anticipating market trends.
After striking a deal with a sales, the trader arranges a reverse trade either with another trader belonging to another entity of the same institution or to an bitcoin wallet electrum counterparty; market-makersacting the best dealing center wholesalers.
Trades negotiated by market-makers usually bear standard terms. Sales make deals tailored to their corporate customers' needs, that is, their terms are often specific. Focusing on their customer relationship, they may deal on the whole range of asset types. Desk Many large institutions have grouped their cash and derivative desks, while others, such as UBS or Deutsche Bankfor example, giving the priority to customer relationship, structure their trading room as per customer segment, around sales desks.
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One room in Paris may have traders paid for by the New York City subsidiaryand whose working hours are consequently shifted. Some institutions, notably those that invested in a rapid development RAD team, choose to blend profiles inside the trading room, where traders, financial engineers and front-office dedicated software developers sit side by side.
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The latter therefore report to a head of trading rather than to a head of IT. More recently, a profile of compliance officer has also appeared; he or she makes sure the law, notably that relative to market use, and the code of conduct, are complied with.
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The middle office and the back office are generally not located in the trading room. The organisation is somewhat simpler with asset management firms: asset managers are responsible for portfolios or funds; "traders" are in contact with "brokers" — that is, with the above-mentioned investment banks' "sales"; however, this profile is absent from asset management firms that chose to outsource their trading desk.
UBS North-American HQ: the trading room is under the bowed rooftop The development of trading businesses, during the eighties and nineties, required ever larger trading rooms, specifically adapted to IT- and telephony cabling. The teleprinter, or Teletype, got financial quotes and printed them out on a ticker tape. US equities were identified by a ticker symbol made of one to three letters, followed by the last price, the lowest the best dealing center the highest, as well as the volume of the day.
Broadcasting neared real time, quotes being rarely delayed by more than 15 minutes, but the broker looking for a given security 's price had to read the tape Teletype As early asthe Trans-Lux company installed the NYSE with a projection system of a transparent ticker tape onto a large screen. Ina solution called Teleregister,  came to the the best dealing center this electro-mechanical board existed in two versions, of the top 50 or top securities listed on the NYSE; but one had to be interested in those equities, and not in other ones During the s, the trader's workstation was remarkable for the overcrowding of telephones.
The trader juggled with handsets to discuss with several brokers simultaneously. The electromechanical, then electronic, calculator enabled him or her to perform basic computations.
In the s, if the emergence of the PABX gave way to some simplification of the telephony the best dealing center, the development of alternative display solutions, however, lead to a multiplication of the number of video monitors on their desks, pieces of hardware that were specific and proprietary to their respective financial data provider. The main actors of the financial data market were; TelerateReuters Bloomberg with its Bloomberg Terminal the best dealing center, Knight Ridder notably with its Viewtron offering, Quotron and Bridgemore or less specialised on the money market, foreign exchange, securities market segments, respectively, for the first three of them.
The advent of spreadsheets[ edit ] From the early s, trading rooms multiplied and took advantage of the spread of micro-computing. For PC, there was Lotus it was quickly superseded by Excelfor workstations and terminals. Along video monitors, left space had to be found on desks to install a computer screen.
Though software alternatives multiplied during this decade, the trading room was suffering from a lack of interoperability and integration. The digital revolution[ edit ] Video display applications were not only wrapped up in cumbersome boxes, their retrieval-based display mode was no longer adapted to markets that had been gaining much liquidity and henceforth required decisions in a couple of seconds.
Traders expected market data to reach them in real time, with no intervention required from them with the keyboard or the mouse, and seamlessly feed their decision support and position handling tools.
The digital revolution, which started in the late s, was the catalyst that helped meet these expectations.
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It found expression, inside the dealing room, in the installation of a digital data display system, a kind of local network. Incoming flows converged from different data providers,  and these syndicated data were distributed onto traders' desktops. One calls a feed-handler the server that acquires data from the integrator and transmits them to the local distribution system.
This infrastructure is a prerequisite to the further installation, on each desktop, of the software that acquires, displays and graphically analyses these data. Two software package families were belonging to this new generation of tools, one dedicated to Windows-NT platforms, the other to Unix and VMS platforms. However, Bloomberg and other, mostly domestic, providers, shunned this movement, preferring to stick to a service bureau model, where every desktop-based monitor just the best dealing center data that are stored and processed on the vendor's premises.