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Fear of the unknown

Itiviti : Katarina Klangby - 3rd April 2014

The opinions expressed by this blogger and those providing comments are theirs alone, this does not reflect the opinion of Automated Trader or any employee thereof. Automated Trader is not responsible for the accuracy of any of the information supplied by this article.

Ever-increasing speed has been key in trading for the past few years. Once a massive edge for a few, speed is now a commodity. Microsecond speed is available to anyone willing to make the investment. As a result, trading and market making have changed.
While in the past, liquidity was provided by floor traders, it is now often provided by computers - a more efficient process, at a much lower cost to the end customer. However, the speed of computerized trading makes people without direct insight uncomfortable, legislators included. The new German Algo labelling requirements are just one example of how regulators are seeking to understand and control speed. In his recent book "Flash Boys" Michael Lewis adds fuel to the fire, suggesting that the stock market is rigged and that speed is the problem. If you're interested in the flip side of the coin, we thought this Forbes review explains that standpoint well.

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