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Technology Stocks : The *NEW* Frank Coluccio Technology Forum

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To: Win-Lose-Draw who wrote (34744)	10/15/2012 10:31:19 AM
From: axial	Read Replies (1) of 46821

"It will be interesting to look back on this 2 years from now and see how the situation has evolved." High-Speed Trading No Longer Hurtling Forward 'The challenges facing speed-focused firms are many, the biggest being the drop in trading volume on stock markets around the world in each of the last four years. This has made it harder to make profits for traders who quickly buy and sell shares offered by slower investors. In addition, traditional investors like mutual funds have adopted the high-speed industry’s automated strategies and moved some of their business away from the exchanges that are popular with high-speed traders. Meanwhile, the technological costs of shaving further milliseconds off trade times has become a bigger drain on many companies.' nytimes.com I couldn't find Frank's post noting that the economics of HFT should be self-defeating. That appears to be what's happening. Also interesting is the appearance of firms practicing what might be called "counter-HFT" trading. HFT isn't disappearing, it's consolidating. Capital counts. Flash crashes continue: nanex.net --- Theoretically faster trade execution shouldn't be a problem. Two main factors are worrying: [1] The practices linked with it - quote stuffing, information asymmetry, etc. [2] Potential systemic risk - an unknown with a history in automated trading. Mystery Nasdaq algorithm accounted for 10% of bandwidth last week 'Although the exact motive behind the algorithm is still unclear, it has been suggested that a trader could have been testing the water to see how he or she could use the additional bandwidth to create a latency advantage. By using up additional bandwidth, the program could potentially slow down others trying to execute trades, allowing it to buy and sell on information that its competitors wouldn't receive until fractions of a second later. [...] Hunsader told CNBC that regulators should do something fast to better control such situations, as this type of algorithm could have had a negative impact on the stock markets if big news had broken during the week.' news.idg.no Jim

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