Thursday, May 13, 2010

Algo Trading

Just as regulators discovered back in 2007 that credit securitisation had built interconnections and fragilities across the financial system that nobody understood, so too the rise in algo trading has introduced new interconnections – and extreme fragilities, which are poorly understood. A 21st century financial machine – or monster – has emerged, which appears to have spun out of the control of government (or anyone else). Little wonder that recent opinion polls suggest public faith in finance and government is slipping. -- Gillian Tett, in a column today about the dangers of algorythmic trading.

Bonus Link: Kedrosky on the raptors testing the fences.