ABSTRACT
This chapter provides a survey of automated auction systems and to discuss some of the issues surrounding their adoption as market mechanisms. It describes opposition to the spread of automated markets largely stems from inertia brought about by trading heritage and tradition, as well as vested financial and human capital interests in maintaining the status quo. Auction markets with well-specified rules of trading have been observed for centuries, and the continuous double auction under the rubric of open-outcry floor trading has dominated United States financial markets. The chapter explores automation of the trading mechanism refers specifically to the technology of trade execution: computerization of the trade matching, quantity allocation, and in most cases, price discovery mechanisms. The priority rules determine the place of a bid or offer in the queue awaiting execution. The chapter explores the examples of screen design serving different purposes and types of markets.
