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Technology and distribution of financial markets

Over the last 20 years, financial markets have been radically changed by technological progress. In this interview at the CEPR’s June 2022 Paris Symposium, Thierry Foucault presents his study on the effect of this change. His research looks at three dimensions of this evolution: effects of and changes in the payment system, the effect of bid data on financial markets and economic efficiency, and lastly the effects on trading in financial markets. Foucault finds that electronification of securities markets has improved liquidity and price discovery in those markets, but he also points to potential issues with important policy implications for regulators.