Electronic trading platform

In finance, an electronic trading platform, also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a financial intermediary. Various financial products can be traded by the trading platform, over a communication network with a financial intermediary or directly between the participants or members of the trading platform. This includes products such as stocks, bonds, currencies, commodities, derivatives and others, with a financial intermediary such as brokers, market makers, investment banks or stock exchanges. Such platforms allow electronic trading to be carried out by users from any location and are in contrast to traditional floor trading using open outcry and telephone-based trading. Sometimes the term trading platform is also used in reference to the trading software alone.

Electronic trading platforms typically stream live market prices on which users can trade and may provide additional trading tools, such as charting packages, news feeds and account management functions. Some platforms have been specifically designed to allow individuals to gain access to financial markets that could formerly only be accessed by specialist trading firms using direct market access. They may also be designed to automatically trade specific strategies based on technical analysis or to do high-frequency trading.

Electronic trading platforms are usually mobile-friendly and available for Windows, Mac, Linux, iOS and Android, making market entry easier and helping with the surge in retail investing.

The term "trading platform" is generally used to avoid confusion with "trading system". The latter term usually refers to a trading method or strategy rather than the computer system used to execute orders. A platform is a type of computing system or operating environment such as a database or other specific software.

Financial transactions were handled manually by brokers or directly by counterparties until the 1970s. From then, electronic trading platforms were introduced. These platforms and trading venues included electronic communication networks, alternative trading systems and "dark pools".

The first electronic trading platforms were typically associated with stock exchanges and allowed brokers to place orders remotely using private dedicated networks and dumb terminals. Early systems would not always provide live streaming prices and instead allowed brokers or clients to place an order which would be confirmed some time later; these were known as "request for quote" systems.

In 1971, Nasdaq was created by the National Association of Securities Dealers and operated entirely electronically on a computer network. Nasdaq was opened on 8 February 1971. It rapidly gained popularity and by 1992, it accounted for 42% of trade volume in the US.

With the advent of electronic financial markets, electronic trading platforms were also soon launched. In 1992, Globex became the first electronic trading platform to reach the market. E-Trade, a company that started as an online brokerage service, soon also launched its own platform aimed at the consumer. These platforms rapidly gained popularity with E-Trade's growth rate at 9% per month in 1999. In the late 2000s, with the emergence of digital tools, a new generation of investment companies started to appear, which began to offer services to assist non-professional investors in trading. In 2007, a multi-asset investment company, eToro, was founded, focusing on copy trading, social trading, and other types of trading services. In 2017, the bitcoin exchange Binance was founded.