An Amusing Article About a Serious Problem

[Sukerkin]

http://www.bbc.co.uk/news/magazine-19254835

What I term "Millisecond Trading" is something that I have talked about the dangers of for a few years now - sadly I am in no position to make people listen and greed makes too loud a clanging noise in the ears of the financial sector for them to worry about something that doesn't involve their money.

 

[Empty Hands]

Even (especially?) the inventors and users don't understand what they are doing. Unexpected emergent properties are cropping up in these algorithms. Such as "the knife":

No one knows why the trading algorithms are behaving like this. And yet, they continue to use them, despite the dangers - Knight may yet go bankrupt. Even the speed of light is becoming a barrier. Companies are moving closer to New York to shave a few milliseconds off their fiber optic trading time. Can you imagine?

One way to halt the madness - a very small tax or fee for every trade. An amount small enough that even high volume human traders would barely notice it, but enough to wipe out the miniscule margins that millisecond trading brings.