Monday, April 8, 2013

Truth in Trading: Man vs. machine

From the NY Post: Massive fraud in the high-speed trading markets is escaping detection because regulators and exchanges are dithering on a powerful supercomputer to uncover the scams.  And as retail investors begin dipping their toes back into stocks, now at record prices, the market watchdogs are asleep at the wheel..”

In fact, about 65 percent of equity trading volume alone is accounted for by high frequency trading computers releasing tiny, rapid-fire buy and sell orders in nanoseconds, according to Aite Group….
Unlike the individual investor, the machines have immediate access to the kind of extensive financial data that moves markets. They often employ controversial techniques like “quote stuffing” and “wash trades” to move prices in their favor….

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