Trading on digital platforms began to replace trading floors (the “pits”) in the eighties. In the nineties, real time gross settlement systems (RTGS) led to a revolution in wholesale payments worldwide, bringing added security to market transactions at affordable costs, thanks to their ability to effect a huge increase in efficiency (a rise in the velocity of circulation of central bank money).
The next step was to eliminate counterparty risk in securities transactions via the adoption of delivery versus payment (DVP).1 The emergence of fast electronic communication networks allowed investors to use real-time data for algorithmic and high-frequency trading,2 which in Europe now account for about 70 per cent of all equity trades.