Photographer: Jon Levy/AFP via Getty Images

Odd Lots: The Lost History of Financial Market Modernization


How stocks used to trade - by newspaper ads and phone calls.

Source: Courtesy of Les Seff

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Every week, hosts Joe Weisenthal and Tracy Alloway take you on a not-so-random walk through hot topics in markets, finance, and economics.

How is it that stocks are traded on electronic exchanges in the blink of an eye but bonds still trade over-the-counter by phone and sometimes even by fax? Today we discuss one of the most pervasive mysteries of market structure with Chris White, the former Goldman Sachs executive who’s now CEO of ViableMkts, and his old boss, Les Seff, COO at AIMPaaS LLC, to discover why bond trading remains so darn old-fashioned despite numerous attempts to pull it into the 21st century.

Looking back at history, we can see a pattern to market modernization that was initiated by the OTC equity market almost 50 years ago. Can this history provide us with insights that can put fixed income markets on a path to modernizing?


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