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Technology Stocks : The *NEW* Frank Coluccio Technology Forum

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To: Frank A. Coluccio who wrote (35715)	10/2/2010 2:53:07 PM
From: axial	Read Replies (2) of 46821

The Flash Crash report is out: The problem is NOT Mrs O'Leary's cow. It's not HFT, per se. The problem is systemic risk at the intersection of technology and markets. Almost nobody reading this post is unaffected. --- SEC/CFTC Report: SKYnet Caused Flash Crash "What I read into this is a system devoid of human judgment or rules as the underlying structural factor. There is no adult supervision, only bots and silicon. Instead of putting SKYnet in charge of national defense, we have put it in charge of our markets and economy. The end result — minus the spectacular special effects — seems to have been the same. Over my career, I have criticized specialists for raping and pillaging various orders at will. But a system without humans charged with maintaining orderly markets, with software bots swapping shares with other silicon-based life forms, is what has replaced that. Perhaps the cost of orderly markets was the specialist’s license to steal." ritholtz.com What’s in Your Router? "The “flash crash” of May 6 was not the result of a fat finger or rogue trader but the result of a market structure that has gone horribly wrong. When the market needed it, the high-frequency traders who act as market makers simply stopped supplying liquidity. The quick response to add circuit breakers is a mere Band-Aid on a wound that is still infected. Only serious market structure reform will bring back real liquidity as well as transparency, to prevent another flash crash from happening again. Perhaps it is time for a more organized and sharing atmosphere of collaboration among traditional institutional investors. The trading pendulum has swung from a mostly human trading model to a mostly electronic, high-frequency trading model. We are confident that unified action can help swing this pendulum back to the middle." themistrading.com Waddell & Reed Also Kidnapped the Lindberg Baby, Shot JR Ewing "What many of us are shocked about is that the High Frequency Traders are only getting a supporting role in this report rather than the starring one they deserve. The Great Chicago Fire was "caused" by a cow kicking over a lantern - but the buildings being on top of each other and being essentially constructed of kindling is the real reason the fire was so destructive. To guys like me and Joe Saluzzi (Themis Trading), who have witnessed this market become a robot playground, Waddell & Reed's stupid trade was just Mrs. O'Leary's Cow...the market itself and its domination by automatic algorithmic trading should have been the focus." thereformedbroker.com Jim

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