Topic. 8: Internet-trading

1. Prerequisites for the emergence of electronic commerce technology

International exchange activity and its development were closely related to the technology of trading on commodity and stock exchanges. Trade technology is closely related to the specialization of exchanges in international commodity and financial markets.
Exchange trading technology involves interconnected exchange transactions carried out by participants in organized markets. The organizational principles of international exchange trading depend on the evolution of trade technology. All exchange trading technologies had certain common features:
- expression of supply and demand at the national and global levels;
- establishment of a mechanism for providing intermediary services;
- coordination of existing organizational conditions of trading on exchanges between brokers and clients;
- streamlining of the clearing and settlement procedure;
- establishment of processes for storing and delivering underlying assets.

Market depth indicates the number of underlying assets available on organized markets. This indicator can clearly show the level of development of exchange trading technology. On the other hand, the presence of standardized assets, primarily raw materials and semi-finished products, indicates the current level of development of organized commodity and financial asset markets.
Market width - indicates the number of exchange participants involved in the execution of exchange transactions in exchange trading systems. A high number of participants is a positive factor indicating increased exchange liquidity.
Spread - an indicator of the difference in prices between buyers and sellers on organized markets. There are always two prices on exchanges - the buyers' price and the sellers' price. The difference provides speculators with a price range that is used to build speculative exchange trading strategies.
The organization of exchange trading involves the development and improvement of exchange trading technology, which has evolved for a long time. The first trading technologies were closely related to the organization of trading on the exchange floor. Exchange trading is carried out in the form of auction trading. The auction provided the opportunity to qualitatively organize exchange trading in commodity assets on exchanges.
The first exchanges provided trading in their exchange floors based on the use of auctions, namely:
- simple auctions;
- absentee auctions;
- double voice auctions.

The next evolutionary stage in improving the technology of stock trading was the introduction of a double voice auction. During double voice auctions, stock market participants have the opportunity to use their voice and sign language to conduct high-quality trading in stock market assets.
A double voice auction is conducted according to the established rules of stock market trading. Brokers in the stock market halls shouted out their clients' orders during the trading session, and stock market employees recorded them, after which the transactions were considered open.
Contracts concluded on the stock market must be registered during the trading session, otherwise they will be considered over-the-counter. Preliminary registration of the transaction is carried out by filling out an application for the purchase or sale of stock market contracts. Transactions are registered within the time limits established by the stock market trading rules.
Brokers have the right to check the availability and quality of stock market assets, and at the same time, monitor the solvency of their clients. Sellers' brokers must act as guarantors in the event of delivery of the underlying assets.
The clearing department on commodity and stock exchanges sends payment documents to exchange trading participants. In this case, a clearing fee is charged to both exchange trading participants for clearing settlements.