Trading markets then and now

Trading markets go very far back in time and the concept was recognized as early as the11th century. It is interesting to compare the historical concept of trading markets with modern day markets, specifically foreign exchange.

There are still some similarities between today’s foreign exchange global market and the original markets.Today there are many buyers and sellers for a given market and new participants may easily enter the market. By it's very nature foreign exchange takes place in multiple geographical locations. But because of the technology being used, information is readily available globally, including financial, economic and political events that could affect the markets. Just like commodity markets where identical products are being traded globally, foreign exchange traders in different centers are continuously in touch and buying and selling from each other. The technology creates a market where centers are open at the same time and there is no evidence of substantial price differences. Unlike fur trading in a village in the 11th century, today there is not perfect “transparency,” or full and immediate disclosure of all trading activity. Individual traders know about the orders and the flow of trading activity in their own firms, but that information may not be known to everyone else in the market. The use of electronic trading and brokerage systems has increased transparency and pricing information is more broadly disseminated for certain foreign exchange products and currency pairs. Like an "electronic village", the over-the-counter foreign exchange market could be regarded as not only large and liquid, but also somewhat transparent, efficient and smoothly functioning.