Frank, with HFT it's not just the technology, it's the intersection of technology with culture.
As NASA, Wall Street and lately BP have demonstrated, the probability of harm rises with incentives for risk-taking. Incentives are usually pictured as financial, but take many forms. Possible termination is a perverse incentive; there are many stories of conscientious people who warned, and lost their jobs.
Culture, ethics and market-skimming profits aside, HFT is becoming reminiscent of old jokes about Windows and the Blue Screen of Death, providing just the sort of thrilling adventure we like to see at the heart of our financial markets. From Tuesday...
Another Day, Another Flash Crash
"The stock which had been trading at $39.58 literally milliseconds earlier, saw a SkyNet T-1 unit go berserk and take out the bids at $37.22, and $35.77 in sequential fashion, with the next trade being at at the residual stub quote of $0.01...
... The trade, which appears to have taken place on a stock platform owned by CBOE Holdings Inc . (CBOE), set off a single-stock "circuit breaker" as exchanges this week expand the trading halts to all stocks in the Russell 1000 index, alongside some exchange-traded funds.
A spokeswoman for CBOE said Tuesday that the trades that triggered the circuit breaker were canceled. The CBOE Stock Exchange, the market where the trade took place, was looking into the issue, she said."
zerohedge.com
Jim |
