UCLA

In social sciences ranging from economics to history, sociology, and geography there is a widespread consensus that information technology has reshaped global finance. There is little agreement, however, on what the effect of information technology has been. Management literature argues information technology democratizes finance by making it more accessible around the world. Because digitization makes it tractable to copy and paste the software that has come to define exchanges, digitization could allow for a more rapid diffusion of stock exchanges to new regions. Conversely, political economists since the 1980s have argued that digital telecommunications only further concretize the locational advantages of existing centers of finance. In preliminary research, I found evidence for both trends. Between 1980 and 2010, the number of securities exchanges in the world has more than doubled. A substantial portion of new exchanges have been built in countries with no prior financial exchanges. Furthermore, since the 1960s, a growing percentage of global stock exchanges began to utilize computerized trading infrastructures. Of the 255 stock and derivative exchanges built by 2010, 91% used an electronic trading platform. Alongside the proliferation of stock exchanges, the industry has also been consolidated by a duopoly of market infrastructure vendors led by Intercontinental Exchange (ICE) and NASDAQ-OMX group. What role does information technology play in both the expansion of global financial markets and the consolidation of the stock exchange industry? To understand the relation information technology has to the construction of global finance, I focus on the history of NASDAQ. In 1971, NASDAQ became the first nation-wide electronic stock market. Based in Trumbull, Connecticut and developed by Bunker-Ramo computers, the NASDAQ system was designed to communicate the prices at which brokers across the United States would be willing to buy and sell stocks. Between 1971 and 1990, NASDAQ developed successive layers of financial infrastructure at national and international scales. In the 1980s, NASDAQ partnered with exchanges in London and Singapore to develop one of the first international computerized networks of stock exchanges. Now, NASDAQ is a multinational firm that provides trading platforms and market services to stock exchanges around the world. How NASDAQ developed from a single datacenter in Turnbull, Connecticut into the largest financial information infrastructure vendor remains an understudied yet critically important history.