Trading of financial instruments at first started to be very straightforward. It goes from one creditor to one debtor.
In the 1100`s agricultural debts in France have started to be bought and sold by merchants, giving rise to a market dealing not with fruits and vegetables, but with paper representing loans to farmers.
In the 1300s, merchants particularly from Venice, started to trade government debt between merchants and the Venetian councils. Other City-states followed suit, with Pisa and Genoa following and even started buying and selling government bonds of one city-state to another city-state.
This complex web of paper is profitable, but is certainly inconvenient. The innovation of the Stock Exchanges was primarily what products or services can be made. In a sense, the technology of the stock exchanges was completely tied to the technology of the academics, which is the manual time-consuming pen and paper.
Only when the printing press was invented when the stock exchanges started to print certificates. However, certificates, while easily and not too time-consuming to make, can still be inconvenient when you have to carry them around to be exchanged.
This need for physical delivery of the said certificate has proven to be too cumbersome that some merchants have to think of ways to make it better. It was when the Dutch in a way invented the modern stock exchange where one specialized “bourse” makes a certificate of the debt or equity certificate, making the trading of certificates easier to do.
The invention of the telephone has improved the ease of trading by leaps and bounds; distance is no longer a concern as all you need to do is to call a broker who will take charge of finding buyers or sellers of the said security. This has facilitated trading, before, it takes days and even weeks to settle the security. Now one can expect a security to be delivered within a few days. This is where the T+3 delivery came from; it takes the trade day plus 3 days for a security to be delivered.
Another technology disruptor is the internet; before financial institutions like banks and hedge funds have to be wary only of themselves and the government. Now, the public can access the stock market and can make mini boom and bust cycles. The internet became the great equalizer.
The telephone and the internet changed the platform; distance and location is no longer a problem. The internet allows you to buy and sell anywhere and the phone allowed personal communication before the internet.
Nowadays, there is another shift; some financial decisions are now being made by robots and programs that can find opportunities in a split second. The shake-up given by technology in the financial world is big, and opportunities can still be found.