For all of you who thought high-speed trading began 10 years ago, think again.
Here's an excerpt:
From the outset there was a deep and abiding suspicion of the broker, who, for a price, was willing to buy or sell your stock, bond or commodity. It was a suspicion that these middlemen knew something that buyers and sellers did not.
True or not, these complaints underscore a larger historical fact: any technology that increased the speed of information flow was immediately adopted by the trading community in both Europe and the United States. Traders have employed every known conveyance to trade faster and cheaper. They were among the earliest adopters of faster boats, faster stagecoaches and private horse expresses. The trading of securities was among the very first uses of the telegraph.
The adoption of these high-speed trading techniques had two characteristics: 1) they greatly reduced the price differences between markets, and 2) those who were slower to adopt bitterly complained that the new technologies offered unfair advantages to the participants.