20130310Cashin_TMF_05 | Summary and Q&A

TL;DR

The trading floor remains crucial for traders to gather information, gauge market activity, and react quickly to changes, despite the presence of electronic trading platforms.

Key Insights

• 🤣 Centralizing trading on the floor allowed the New York Stock Exchange to offer the best prices and grow in prominence.
• 🖐️ Designated market makers play a vital role in facilitating trade and ensuring better pricing.
• 🤣 Despite electronic trading, being on the trading floor provides traders with real-time market information and an opportunity for human interaction.
• 🤣 Traders on the floor need to react immediately and make informed decisions based on their understanding of market activity.

Transcript

what exactly is going on on the floor behind you what are all those people doing that man okay several are doing various things there there are what we used to call specialists which have been transformed into designated market makers and they are the people at the center of trade so that the viewers best understand it long before electronics the N... Read More

Questions & Answers

Q: What is the purpose of the designated market makers on the trading floor?

The designated market makers are individuals responsible for facilitating trade and ensuring better pricing on the floor. They bring together the best bids and offers, resulting in improved prices for traders.

Q: Why did the New York Stock Exchange decide to centralize trading on the floor?

Centralizing trading on the floor allowed for all the best bids and offers to come together at one central point, leading to better pricing. This contributed to the growth and prominence of the New York Stock Exchange.

Q: How do electronic orders fit into the trading floor system?

With the advent of electronic trading, traders can now place orders electronically from anywhere. However, many still find value in physically being on the trading floor to gather real-time information, gauge market activity, and ensure they don't miss any crucial details.

Q: Why is it important for traders to react immediately on the trading floor?

When an event occurs, traders on the floor need to react immediately to ensure they understand the implications for their clients' positions. With no chance for reflective thought, quick decision-making based on scenario building becomes crucial.

Summary & Key Takeaways

• The trading floor, once the center of stock market activity, now houses designated market makers who facilitate trade and ensure better pricing.

• Centralizing trading on the floor helped the New York Stock Exchange become prominent and maintain centralized pricing even with the advent of electronic trading.

• While electronic orders can be placed from anywhere, traders still find value in being on the floor to gather real-time information, observe market activity, and react quickly.