How the US Financial Market Embraced Automation

This paper is part of a funded research grant into how financial regulation in the US has evolved. For almost one hundred years the regulators have attempted to manage evolving trading activities and security types. Ever since the Wall Street crash of 1929 rules have been defined and then changed as the Global Recession and World War 2 constrained market growth. Change can be seen following the introduction of computers in the 1960’s, as trade volume and order types grew. Not only did automation require new controls, it also required a paradigm shift in how these new products could be traded. This paper explains how the market has changed to provide the foundations on which today’s trading systems operate. This now poses real problems, as regulators argue whether crypto-assets are securities or derivatives, and who should govern them. The absence of clear mandates has fueled criminal behavior by some crypto firms.