Once again, problem with electronic exchange system
Bats Global Markets Inc., the third-largest U.S. stock exchange operator, said system errors is the reason of thousands of transactions being executed at prices that were not the best available.
From Bloomberg:
The problem dates back to October 2008 and has affected nearly 450,000 trades, costing customers $420,360 in inferior prices, a spokesman Randy Williams told Bloomberg.
The pricing issues at Bats follow the company’s withdrawal of its own initial public offering after a technology glitch in March and the Nasdaq Stock Market’s botched IPO of Facebook Inc. in May, events that undercut investor confidence that exchanges are in command of their technology systems.
More comments: WSJ: BATS: 'System Issue' Cause of Pricing Errors
Any thoughts on that?
It's an overwhelming trend in the finance industry that companies are trying to use electronic trading systems to substitute human traders. The trade debacle of Knight Capital is another example. But I have asked some traders about their opinions on this, they basically told me that traders' instinct is never substitutable. But in my opinion, from a physiological perspective, instinct is just a subconscious habit developed upon past experiences, which can be substituted by a huge enough database that incorporates enough amount of data. It's theoretically doable. So, I think this trend is irreversible, and I just hope that the technological error does not become some sort of excuse for some dirty play in manipulating the stock market.
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