Bourses have become hugely more effective

FOR most of human history, exchanges involved physical contact. Whether trading gossip, gold or grain, people came together to give and take in a manner that was both social and, with luck, __(1) __beneficial. Marketplaces, the forerunners of exchanges, were the heart of early financial centres.

Once professional brokers got in on the act, though, the nature of exchanges began to shift. Buyers and sellers lost some of their close __ (2) __ with markets. Transactions became more complex, involving for instance the right to buy and sell goods in the future at a price fixed in the present. The brokers promised efficiency and superior returns, but some put their own interests above those of their clients. Outsiders had to take it on __ (3) __ that all the shouting and hand-waving by men in brightly coloured jackets meant they were paying, or being paid, a __ (4) __ price.

Over the past decade financial exchanges have changed out of all recognition. From Stockholm to Singapore, they have modernised and __ (5) __. Fortunately for investors, most of the changes have been for the better. They have brought more choice, faster trading and greater efficiency. Trading costs have come down, too. This __ (6) __ to financial centres, because exchanges are still at the heart of the world's financial network.

Much of the transformation is being driven by the increasing sophistication of investors and financial __ (7) __, particularly big investment banks, which direct the bulk of capital flows around the world. "Give a call to Goldman and you have a choice of all these global exchanges," says an official in Asia. Regulation has played a role as well. In both America and Europe, politicians have introduced rules aiming for greater transparency and competition.

As a result, the world's biggest exchanges are vying as never before for a share of highly mobile global capital. Their vast computerised hubs and their ability to zip transactions around the world in split-seconds allow them to play a dual role reminiscent of the marketplaces and sailing ships of medieval times. The most successful are those with attractive goods on offer, competitive prices and speedy response times.

__ (8) __ the rise of electronic trading, exchanges may have become more virtual than physical marketplaces, but the broader __ (9) __ of exchanges on cities - their "multiplier effect"-keeps on growing. An official at the London Stock Exchange notes that although its total listing fees (as opposed to trading fees) in the past financial year were a relatively puny Ј28m ($56m), fees __ (10) __ by advisers to new companies on the exchange - lawyers, investment bankers, accountants, public-relations firms and so on - were estimated at Ј3.5 billion.

1. A. economic B. economical C. economically D. economy

2. A. contact B. control C. support D. distance

3. A. behalf B. trust C. confidence D. charge

4. A. fair B. fare C. fares D. free

5. A. updated B. contracted C. expanded D. risen

6. A. deals B. matters C. essential D. important

7. A. facilitators B. helpers C. subsidiaries D. intermediaries

8. A. Given B. Taken C. Putting D. Allowing

9. A. demand B. impact C. pressure D. dependence

10. A. produced B. given C. generated D. supplied