A trading system that is used to buy and sell securities (such as stocks and bonds), financial derivatives (such as options and futures) and foreign exchange (world currencies). By electronic trading, traders execute their desired transactions at a computer keyboard and monitor, in a way that matches buyers and sellers in a virtual space rather than a physical place.

Electronic trading is a more sophisticated method than its predecessor ‘floor trading’ and ‘phone trading’ in terms of real-time execution, cost-efficiency (savings in brokers’ fees and commissions), and worldwide availability (as it is not confined to a physical place or a specific country or continent). Additionally, it provides traders with an easier way to complete, monitor, clear, and settle transactions. However, glitches and cancelled or unfulfilled trades do still occur. Some electronic trades are designed or carried out by complex algorithms, without any intervention from human traders.

The world’s first electronic stock market was NASDAQ. It was set up in 1971 as an electronic bulletin board, rather than a straight-through processing (STP) platform. Few years ago, exchanges like the CME created electronic trading platforms to accommodate for investors who had began to show interest in trading in foreign exchange.