This article was originally published on TechDesignForums and is reproduced here by permission.
Consider the Wall Street controversy over High Frequency Trading (HFT). Set aside its ethical (and legal) aspects. Concentrate on the technology. HFT exploits customized IT systems that allow certain banks to place ‘buy’ or ‘sell’ stock orders just before rivals, sometimes just milliseconds before. That tiny advantage can make enough difference to the share price paid that HFT users are said to profit on more than 90% of trades.
Now look back to the early days of electronic trading. Competitive advantage then came down to how quickly you adopted an off-the-shelf, one-size-fits-all e-trading package.