Technology and Trading
http://thekojonnamdishow.org/shows/2010-05-18/technology-and-trading
It's being called the "flash crash." Over the course of a half hour, the stock market plunged nearly 1,000 points before reversing and recovering 543 points in a minute and a half. One culprit could be the ultra-fast electronic trading that automatically buys and sells stock at certain trigger points. We'll explore how technology is transforming the nature of the stock market, and what safeguards could be put in place for the future.
Guests
James Angel
Associate Professor, McDonough School of Business, Georgetown University
David Weidner
Columnist, Marketwatch and The Wall Street Journal
Comments
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Speaking of trying to follow the money:
How probable is it that this was an *intentional* gaming of the system?
If several large share-holding Wall-Street firms conspired to do a sudden sell-off of a few prominent corporations' shares and they know what most of the other trading firms' sell-off algorithm point is set at, then they would have known that a huge share price downward spiral would ensue. They would have sold at a high price. Then they wait a half hour and buy back the same shares at a fractioin of the price at which they sold. Voila, they've instantly made millions of dollars.
They could now be waiting to see if the SEC can follow the data trails back to them. If they can't, then there will be many more of these system-gaming attacks. Whatever reforms come out of this episode, it must include a rigorous accounting system for following the money trails to see who is making all the money at the expense of the financial system as a whole.
If several large share-holding Wall-Street firms conspired to do a sudden sell-off of a few prominent corporations' shares and they know what most of the other trading firms' sell-off algorithm point is set at, then they would have known that a huge share price downward spiral would ensue. They would have sold at a high price. Then they wait a half hour and buy back the same shares at a fractioin of the price at which they sold. Voila, they've instantly made millions of dollars. Health Insurance For The Unemployed
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In my opinion its the ultra-fast electronic trading that automatically buys and sells stock at certain trigger points that causes a lot of extreme fluctuations in the stock market. plantar wart removal