The Real Impact of HFT And What You Don't Know

NNT has it right when he talks about fragility in the context of financial markets. For example, in 2010 the Flash Crash caused a near 1K point plunge in the DJIA. In 2012, a rogue algorithm executed on the NASDAQ botched the BATS IPO and caused similar problems again on April 4th. Last August, Knight Capital released it RLP that accidentally went live on NYSE’s system and blew up about $440M of capital in just a few minutes! What's next? Read on to find out more on about a fascinating documentary detailing the impact of HFT…

In 2013, the reality is trading is not what you think you know, it’s what you can’t see and sheep-like regulators clamor for a fourth grade explanation on the complexity of HFT. Despite most experts give the broken record argument of frontrunning vs price discovery, an up-and-coming documentary by Camilla Sullivan interviews key industry experts discussing the state of HFT and market stability.

Further, she alludes to the fact that the NYSE is now just a ghost exchange and that today’s orders are predominantly routed through data exchanges in NJ where elite trading houses use the currency of 1’s and 0’s, co-location, and ultra-low latencies to steal profits from 99% of the market.

Also, check out the excellent documentation from Nanex that vindicates such anomolies throughout the years. If you want to know more in-depth about Ghost Exchange, see their official trailer and attached PR...