Friday, April 10, 2015

High-frequency trading is ruining the stock market

http://www.bbc.com/news/business-32246655

"Mr Lewis says the major question is how to structure markets for stocks and shares as well as bonds and currencies as computers slowly and inexorably take over from human traders.
Martin Wheatley, the head of the markets watchdog the Financial Conduct Authority, has said that high-frequency trading now accounts for 30% of business on the UK equity market. In America it is higher.
Mr Lewis says that it is unclear - certainly in the US at least - whether the regulators are going to do anything about what he says is such a major problem.
One reason, he argues, is the "revolving door" between the Wall Street banks and firms engaged in high-frequency trading and the regulators themselves. A 'cosy club' has grown up, he says.
But, although that may be the case, Mr Lewis actually argues that the story of Flash Boys is one of hope.
And that's because the main witness in his book, Brad Katsuyama, a trader at the Royal Bank of Canada, has set up an exchange called IEX which seeks to eliminate 'predatory opportunities created by speed'."

I have mostly left the stock market because of stuff like this.

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