Blackboard Trading

What Is Blackboard Trading?

Blackboard trading refers to an outdated practice where exchange trading relied upon handwritten bid and offer prices on blackboards.

How Blackboard Trading Works

Blackboard trading involved a laborious process whereby trading specialists manually wrote bid and offer prices on huge chalkboards that lined the walls of an exchange. Their use began to decline in the late 19th century as traders began to adopt the telegraph as a means to follow ticker prices. The rise of automatic quote boards in the 1960s and the need for more efficient methods of disseminating quotes eventually made the blackboard trading obsolete. The slow speed of trading necessitated by the use of blackboards made it difficult to meet demand for greater trade volumes.

The advent of electronic trading eventually solved the efficiency problem, making floor trading, and by extension the personnel involved in floor trading such as specialists and runners, practically obsolete. The Nasdaq exchange pioneered computerized trading in 1971, and most of the industry has not looked back since. While a dwindling number of exchanges continue to rely upon floor trading, electronic options generally exist alongside them and carry the bulk of trading volumes.

From Blackboard to Circuit Board

The giant blackboard that made trading possible in the early days of the New York Stock Exchange also gave rise to its nickname, the Big Board.

Subsequent investing technologies also gave rise to artifacts that remain in the lexicon to date, most notably the dissemination of quotes via telegraph. For approximately a century, machines called tickers translated the electronic impulses coming through the telegraph wires into letters and numbers corresponding to stock quotes. That generated the term ticker symbol, which has itself outlived the use of ticker tape at brokerage firms anxious to read and respond to timely quotes. The ticker tape parade, which still greets championship sports teams and returning civic heroes, took its name from the use of old ticker tape thrown out of office windows as confetti.

Quote boards capable of displaying current prices electronically replaced tickers through the 1960s, eventually giving way to computerized price information first delivered by a device called a Quotron. The proliferation of Bloomberg terminals made Quotron devices obsolete and finally ushered in the era of real-time stock quotes delivered by computer.

The increasing ease with which individual investors can acquire real-time stock quotes has generated substantial changes in financial markets. High-frequency trading, day trading, and a range of strategies that depend upon quick responses to price movements would have been all but impossible in the days when investors needed to consult the chalk to price a trade.