The Importance of Computers to Stock Brokers
The Securities and Exchange Commission (SEC) defines stockbrokers as financial intermediaries that coordinate transactions on your behalf. Brokers utilize computers and information technology throughout the investment process. Beyond trade execution, computers help brokers attract and build clientele.
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Identification
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Computers stream investment price quote and volume information for brokers. Volume refers to the number of shares that trade hands during a particular time period. Information technology also supplies brokers with financial statements and relevant news for particular investments. Brokers use this information to pitch investment ideas to clients.
Features
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Brokers facilitate trades with the help of computers. Computers organize financial markets into an auction format for each security. Trades clear at price points where the highest bidding and lowest offering prices meet.
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Considerations
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Computers help brokers generate client statements that summarize account activity and tax information. Computer automation spares brokers time-consuming and tedious paperwork.
Strategy
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Brokers can prospect for new business with computers. The technology helps organize time for marketing events, and can even be linked to telephones for cold calling.
Warning
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Brokerage information technology may ignite financial panic. The Flash Crash of May 6, 2010 has been blamed on a combination of rumors and computer-automated program trades. The Dow suffered a record 998-point loss amidst the Flash Crash.
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