Books about the systems behind banking

February 10, 2006 8:04 PM

Are there books that explain, in great detail, the systems that clear trades (equities and options) on the markets and shuffle funds among banks in the U.S.?

This is a personal curiosity. I know how all of these things work, but I am interested in the mechanisms behind them.

Specifically, I'm looking for books (or other resources) that explain in detail what happens in...

• Buying a stock -- info about how big brokerages work the spread, and also info about the electronic systems that provide liquidity for smaller trades


• Shorting a stock -- what steps does the broker take to find a bank from which to borrow the shares?


• Buying/selling options -- how is the exchange of the option contract between buyer and seller handled?


• Transferring money -- details about ACH (the article's "ACH process" section is good, but I'd like to read more about what happens on the Fed's side)

In summary, where can I read more about the systems that transfer huge amounts of money among banks and people?

posted by qslack to work & money (2 comments total)

I've heard really good things about Wall Street, by Doug Henwood. I've only made it part of the way through, but it's got (I'm told) one of the best explanations of what actually goes on in 'high finance'.
posted by tew at 10:36 PM on February 10, 2006

what steps does the broker take to find a bank from which to borrow the shares

Not to answer your question directly, but I did want to correct a misimpression (or typo): Banks don't normally loan out shares - brokerage houses do, because that's where people buy stocks (and let their stock brokers hold the shares - "in street name")
posted by WestCoaster at 3:37 PM on February 12, 2006