As usual, the regulators make things worse. Chilton wants accountability. Just stand back and watch: <Chilton said in prepared remarks for an energy conference in Las Vegas. "We should explore ways to hold those who set off runaway robotic trades accountable," he said. At least one algorithm is know to have disrupted the oil markets this year. Infinium Capital Management said in August it was the company at the center of a six-month probe by CME Group Inc into why a new trading program malfunctioned, racking up a million-dollar loss in about a second on February 3." >
So, when Infinium Capital says "Oh woe is us, our million mile a second computers made silly trades at the bottom of the flash crash and we are short of a few $$billion", don't bail them out by canceling their trades.
If people want to buy and sell, let them put their orders in. If they do dumb trades, then that's their problem. That's what makes a market. There is no magical "right" level or correct speed of people realizing a market is miss-priced.
Flash crashes are fun and just million mile a minute computers playing games with each other - playing "chicken". The flash crash tests liquidity and brings extra liquidity into the market [me for example] to profit from flash crashes. Now though, it's too dangerous to leave trades and liquidity lying around in the market waiting for a price to arrive, because the regulators will steal your money and give it to their supersonic million mile a minute computer friends who whine that they need their trades cancelled ["Just the losing ones thanks"].
Chilton is obviously clueless about markets, liquidity, supersonic million mile a minute computers, algorithms, mathematics and monetary motivation. Bart Chilton probably has got some talents but they were not disclosed.
Mqurice |
