Since I've been working in the dairy commodity trade, I can understand why these "road warriors" can't actually bridge the evolutionary gap: because if you were the missing link in the evolutionary process, you would probably get along with your ancestors as well as your progeny.
The trader is like the last existing cowboy, using the six-shooter because it's more reliable than those semi-automatics, kicking-up a dust storm whenever he has a chance and then making up with those involved, paranoid beyond measure concerning the small amount of assets and goodwill he has because that's what's going to save him in the wilderness. Yes, he also uses emails, but he'd rather use the fax, if given the choice. Anyway, a lot of his clients don't even like this whole IT revolution anyway. There is a lack of "humanity" in the screen, that's why they cling to the phone receiver.
These are the SME traders. Of course, there are large companies, like Fontera, in New Zealand, that are making advances in the tech side, but they seem to only stir resentment in the old school of trade, and allegations of conspiracy theories to "control the international markets". Fontera has put in place the first virtual market place for dairy commodities called globalDairyTrade. This is a place where pre-approved buyers can bid on certain quantities over a period of maximum 3 months. Once the tender is closed, the results are made public. Some people in the trade say that these results influence the direction prices are going to take on the world market (Fontera is already controlling 50% of the international dairy trade and has always tried to push the prices in the direction that would be most beneficial for them in the next season). Truth or fiction, no wonder our good ole' boys are afraid of the system...
But if you believe in the laws of the market, what's there to be afraid of? The system cannot really influence the laws of offer and demand, at least not in the long run and not by much. But arbitrage is the trader's bread and butter. They live from the market's imperfections, and any attempt to bring the market closer to it's ideal state of balance would be an attempt on their bread-winning abilities. No wonder the traders dream of the past as "the good old days".
In the same time, technology has allowed the trader to gather more information about the market, faster and in a more reliable way. Everything from emails from their clients and suppliers to the market information and currency forecasts found on the Internet, which has become a precious tool in their business.
So how come the trader is not able to reconcile his need for secrecy and arbitrage with the increased market efficiency brought upon by the advent of more and more advanced information technology? I believe that in fact the gap that they have failed to bridge is the "business intelligence" gap. They are not able to use technology in order to leverage the information generated in the course of their business, combine it with the market information and create profitable trading strategies. Most of the attempts made by trading companies to create software that could capture and treat this information and knowledge have had mitigated success or right out failure, due to the lack of or misuse of the software by the users, the old cowboys, who remain stubbornly opposed to changing their good old ways.
What would be the solution?
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True, us SME traders generally view the advent of high speed internet as a deterrent to good business, because, while greatly helping developing markets improve their economies and growth, has in fact leveled margins throughout. As information circulates freely more and more market participants are aware of prices and costs in the supply chain and hence this translates into lower margins and opportunities for us, traders. Remember, we are not the owners and creators of products, we are mere -as you say "arbitrageurs" of product we do not own and we transport from one end of the world to the other, we are may be sometimes scavengers (looking for loopholes in custom laws or international treties etc... and jump on trades, but when information is being free and accesible to end users or to principals (suppliers) our abilities to command good margins is greatly reduced... hence we view generally this whole Internet revolution with some form of mistrust. Now, on the other hand the Fonterra's of this world have acquired through this media such a huge notoriety lately in the trade that there is no question in our mind that they do in fact manipulate according to their whims the information and therefore create perceptions of false abundance or scarcity according to their best intrest. I disagree with you when you say they do not influence the supply-demand. They do it in the short run of course. The whole game is to take advantage month per month quarter per quarter although I agre at the end of the game real suppy and demand will prevail but by then, Fonterra has made its money, and other traders that could not be in line have lost their opportunity. Now, you say:"They are not able to use technology in order to leverage the information generated in the course of their business, combine it with the market information and create profitable trading strategies". The culprit is that this information is being available more and more to everybody beyond cultural differences: end users, importers, traders, suppliers. So when markets get close to perfection, it is tougher and tougher to this last remnant of vital entrepreneurs to make ends meet. Hence the greater need for prudent risk management skills in trading strategies.
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