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Comment by 0x0 | Hacker News Reader

Why isn't automated high-frequency trading banned already?

Does it not go directly against the spirit and purpose of having a stock market with proper investors?

this is issue nothing to do with speculative trading. Knight is a broker. They provide an interface to the market for retail brokers, spread betting outfits and so on. Their algos execute orders placed by their clients. Their new algo had a bug. That's it.

I don't know the details of retail brokers vs HFT, but this writeup http://www.nanex.net/aqck2/3522.html has a lot of charts showing trades with 25 millisecond intervals.

Just looking at things in a big perspective, the fact that the system is designed for allowing trades at such frequencies makes it seem like markets these days no longer exist for the benefit of the listed companies.

Then again, maybe I don't know wtf I'm talking about :-S I guess I don't understand how real value can be created from such a system.

Check out this TED talk about how these algos. are actively changing the surface of the planet:

http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_o...

The speaker makes an arguement that no one can understand how these algos. interact and are being studied like natural phenomena.

Christ Stucchio wrote a HFT apology: http://www.chrisstucchio.com/blog/2012/hft_apology.html

they have hundreds if not thousands of clients some of who in turn each have thousands of customers... so yeah they will be executing a high throughput. And often large orders get broken up into smaller pieces so as to minimised market impact.

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