The financial markets have rapidly evolved over the past couple hundred years, particularly with the advent of electronic communication networks. In the wake of these changes, many legacy technologies used by traders throughout history have gone by the wayside, replaced by faster and more efficient tools used today.
In this article, we’ll take a look at 10 relics from the past that only (appropriately aged or well read) traders can appreciate.
10: Ticker Tape
Ticker tape was the earliest digital communications medium designed to transmit stock prices over telegraph lines between 1870 and 1970. By running a paper strip through a stock ticker, the device provided traders with up-to-date price and volume information about stock market transactions in particular equities or indexes [see also Top 21 Trading Rules for Beginners: A Visual Guide].
Of course, ticker tape has left its market on the financial world. The word ticker is commonly used to refer to a given equity (e.g. ticker symbols), while many traders still believe price and volume transaction data is all that’s needed to profit. The same data can also be seen today scrolling across CNBC or Bloomberg television.
9: Stock Certificates
Stock certificates are physical sheets of paper issued by a public company proving ownership in its stock. While some stock certificates still exist and can be requested at an extra cost from a broker, many large corporations have phased them out in favor of electronic stock certificates in order to cut costs and speed transactions.
In October 2013, Disney Corporation became perhaps the best example of these trends by halting the issuance of its famous stock certificates that have long made popular gifts and collectibles. Old stock certificates and famous corporate busts – such as those in 1999 – have even become highly sought after collectibles.
8: The Original Opening and Closing Bells
Opening and closing bells were first introduced by the New York Stock Exchange back in the 1870s to signify the beginning and end of the trading day. Originally, a Chinese Gong was used as the open and closing bell, but brass bells quickly replaced them as a more practical alternative that’s easier to administer.
Currently, there is one large bell in each of the four trading areas of the NYSE, which are all operated synchronously from a single control. In the 1980s, the NYSE tried to have the bells refurbished but discovered nobody created such loud bells anymore, so a bell-making team was brought out of retirement to build them from scratch [see also Dow Jones Stocks: The Questions We Really Want Answered].
7: Specialists & Runners
The advent of electronic trading has made many jobs increasingly obsolete, including those of specialists and runners. By holding an inventory of a specific stock, specialists make a market by matching buyers and sellers. Runners would be responsible for passing orders between exchanges and brokers in a timely fashion.
Electronic exchanges, such as the NASDAQ, have become increasingly popular given their ability to automatically match buyers and sellers in a timely fashion using computer algorithms. With faster transaction speeds and no human intervention, these exchanges are both cheaper and more efficient than the human alternative.
The Quotron was the first device to deliver stock market quotes to an electronic screen rather than printed ticker tape. By 1986, the device grew to reach 100,000 terminals or roughly 60% of the market for financial data. Many traders may recognize the device for its appearance in the movie Wall Street.
The Quotron failed to keep pace with new technological developments, with companies like Thomson Reuters and Bloomberg taking its place. Currently, Bloomberg Terminals and Reuters Eikon are perhaps the most popular quotation devices/services in use throughout the U.S. and global financial markets.
5: Quotation Boards
Automatic quotation boards were large vertical electronic displays located in brokerage offices to provide current data on stocks followed by that particular brokerage. By 1964, over 650 brokerages had installed such electronic displays (that could also be seen in Wall Street) showing open, high, low and close data.
These automatic quotation boards were phased out by the advent of personal computers, which enabled individual brokerage representatives to maintain their own personal list of stock quotes. However, similar displays are still used in many offices to display popular index quotes, such as the S&P 500 or Dow Jones.
The image below was posted by the Museum of American Finance
Large chalkboards were used throughout the late-1800s and early-1900s to show stock prices. Runners would carry the prices between the exchange and brokerage offices and write them on large chalkboards. In fact, the job was a common entry point to becoming a trader, according to Reminiscences of a Stock Operator.
The use of chalkboards led to terms like the “Big Board,” which was coined to represent the New York Stock Exchange. Some countries only recently switched away from chalkboards to convey current pricing information. Of course, electronic communications were responsible for their demise over time.
The average trader used to receive information via newspaper the following day, with many publications printing large tables of stock market data. In 1889, the Wall Street Journal became the first newspaper focused exclusively on the financial markets, while the New York Times added similar data around the same time.
Stock market index and commodity prices are still regularly published in newspapers, but most individual traders get their information electronically over the Internet. The lack of a delay in getting information has helped the markets become much more efficient over time with greater liquidity.
Am-Quote was a telephone stock quotation system developed by Teleregister in 1964. Using magnetic drums to access data, brokerages could enter a code into a standard telephone and receive up-to-date pricing information on a stock. The system was much faster than other technologies available at the time.
While the telephone is no longer the primary source of stock quotes – replaced long ago by Internet-based quotations, most investors can still call up their brokerages for automated price quotes and/or to place orders. Telephone orders still tend to be more expensive than orders placed over the Internet, however.
Spreadsheets became extremely popular throughout the 1980s in trading rooms. Using programs like Lotus 1-2-3, Excel, Applix, or Wingz, traders could quickly make calculations designed to compute various technical indicators. For example, historical pricing data could be used to calculate moving averages and create charts.
While spreadsheets are still in use, most technical traders utilize real-time data provided through online applications like StockCharts.com or brokerage platforms like TradeStation. Spreadsheets are commonly used to calculate more complex fundamental data points, such as discounted cash flows.
The Bottom Line
The advent of electronic communications has rapidly changed the way that the financial markets work. Over time, trading evolved from a highly manual process that involved runners writing prices in chalk and quotes being delivered by telegraph to information being nearly simultaneously delivered everywhere.
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