ABSTRACT
In 1971, Fischer Black, a key contributor to modern portfolio theory, published two articles that succinctly captured the imaginations of the future of corporate fi nance. In his assessment of the structure and operations of American fi nancial intermediaries-from brokers and stock exchanges to over-the-counter trading services-Black concluded that, with a handful of changes, these could be:
embodied in a network of computers, and the costs of trading can be sharply reduced, without introducing any additional instability in stock prices, and without being unfair either to small investors or to investors at large. (1971: 87)
Merely seven years after Black’s articles on automation, Kenneth Garbade and William Silber provided empirical evidence connecting technology with improvements in the quality of market pricing. In their study of the telegraph and telephone in American and British stock markets, Garbade and Silber (1978) observed enhanced integration, reduced information delays, and a signifi cant narrowing of inter-market price differentials after technological adoption. For Black and his contemporaries, technology was increasingly a handmaiden of the market, the visible skeleton of a global, invisible hand.
