ICT in Information Services; Use and deployment of ICT in the Dutch securities trade 1860-1970

This Ph.d. thesis studies the changes due to the use and deployment of information and communication technology in the Dutch securities trade during the period 1860-1970 on two levels: first, the level of the services provided by financial intermediaries, and second, the level of the structure of the Dutch securities trade. Two theoretical viewpoints were formulated to explain the identified changes. The first theoretical perspective is based on information economics and mainly used to explain the changes in services. From information economics we can hypothesise that if everyone has access to the same ICT at the same time, information asymmetry would disappear. As a result, clients of financial intermediaries can gather information themselves for which they no longer need their intermediaries. In case of the Dutch securities trade, this hypothesis only partly applies. An important institution (Association for the Dutch securities trade) monopolised the Dutch securities trade, and more importantly, monopolised current information on the rates of traded securities. Hence, clients remained dependent on their financial intermediaries as concerns one specific (and most valuable)service, namely the provision of price information. Transaction costs theory is the second theoretical perspective and is mainly used to explain the changing structure of the Dutch securities trade. In the studied period, we see the rise of large of joint stock commercial banks that control almost completely the chain of steps necessary to execute a securities trade order. Before, several intermediaries were involved to execute such an order. The fact that these large players had the means to provide themselves with the most modern and fast ICT of that time, and thus to lower transaction costs, seems to be of overriding importance.

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