However, the exchanges handling these straightforward products face the big challenge of full automation. If they do not solve this challenge, they will fail. In today's fast moving world with growing e-commerce, any exchange can be circumvented. After all, the participants need the products, not the exchanges, and with the Internet any product can be traded as long as there is a buyer and a seller. Today, one of the main problems for the electronic markets is the lack of locals and the liquidity that they bring to a market.
Machines fill orders on a 'first come, first served' basis.
Quick moves very often find thin order books, which at times makes for rather erratic price moves as the market makers need more time to enter new orders. This will be one of the important challenges to the exchanges - to increase the liquidity in most markets. Attracting a crowd of locals would help along. Many will not agree with this and point to the German Bund. True, its depth is probably unmatched even in the pits.