Operating nuclear power stations or super computers plugged into the exchange trading systems incurs the same risk of self inflicted disaster when there is no where to run or hide
One Of The Biggest High Frequenecy Traders Warns Of Potential Market "Catastrophe"
Submitted by Tyler Durden on 02/04/2016 09:20 -0500
Here is part of an article in www.zerohedge.com that told of stupid men and women in charge and courting a catastrophe that they have no control over and did not know enough of. The high risks are obvious and well documented, but they stubbornly stick to a dangerous practice like they were bought and controlled by the high frequency traders to do what they want, freely, and risking a total system collapse.
This is like men and women flirting with the sexiness of operating nuclear power stations, knowing the risks and the inability to provide a failsafe system but ‘die die’ still want to have nuclear power stations. Should a country like Singapore go the nuclear road, would it be due to stupid men, clever men or too clever men’s recklessness or desperation?
Read this article to understand and know who are responsible to expose the ignorants to such high risk with little regards to protecting them from it. Look at how irresponsible men and women can be, how reckless they can be by turning the other way, not wanting to see the elephant in the room just to achieve their private interests.
….Below is part of an article in Back in April 2009, we wrote what may be the first seminal article predicting the failure of capital markets as a result of widespread predatory high frequency trading and fragmented market structure when we laid out "The Incredibly Shrinking Market Liquidity, Or The Upcoming Black Swan Of Black Swans." Several years later, and countless flash crashes, we have been proven right, however one thing is missing: "the catastrophe" that finally wakes up people to the dangers of all the individual things we have warned about over the years.
Today, we are one step closer to that day, when none other than the head of one of the biggest high-frequency trading companies, Mark Gorton of Tower Research,warned that there are several faultlines in the structure of increasingly electronic, automated financial markets that could lead to a “catastrophe” in the long run,according to the FT.
To be sure, Mark Gorton, has a clear conflict of interest: being one of the largest HFT members himself, with his company dominating program trading on the NYSE with his Latour Trading subsiiary, the founder and head of Tower Research Capital argued that exchanges have become far more efficient with the advent of more computerised markets, but "cautioned that increasing complexity brought new dangers that needed to be mitigated."
In other words, don't blame the HFTs, blame the markets, which is to be expected from a person who will be out of a job if HFT is banned.
He further adds that "The recent evolution of markets from manual to electronic trading has had huge benefits and investors save money every day due to the lower cost of trading. But electronic trading brings with it a number of new risks, and we need to continue to strengthen the resiliency of electronic markets,"Mr Gorton told the Financial Times.
What keeps Gorton up at night? The short answer: the lack of safeguards at exchanges to prevent HFT firms like his from dragging the whole thing down:
The high-frequency trader is particularly concerned over the lack of risk controls at exchanges, which he said constituted a “large hole in the middle of the system that needs to be filled”....
Nonetheless, exchange-level risk controls remain “limited at best” and should assume there will inevitably be glitches, bugs and errant trading algorithms that could cause problems in the wider market, according to Mr Gorton.
Glitches from algorithms, he forgot to add, such as the one Tower uses each and every day to scalp and frontrun billions of trades in order flow.
However, his warning, conflicted as it is, is spot on: the market will crash again, it is only a matter of time, simply because the HFTs have captured market regulators so well, nobody has any idea what is going on any more: “We need a regulatory framework that assumes that any single system(can alsoread nuclear energy) in the market will fail and insures that we have multiple redundant levels of checks that can catch failures in other parts of the system,”he said.
What is Gorton's suggestion?
Mr Gorton highlighted in particular the lack of a centralised position-tracking mechanism for the US stock market, the need to refine and synchronise market circuit-breakers between highly correlated markets, such as cash equities and futures, and the absence of clarity over what it takes for trades to be declared invalid.
In other words, focus on the symptoms, shutting down markets when things go haywire, not the underlying cause, which as we have said since 2009 is simple: broken markets, designed to benefit just one group of traders….
Who would it benefit if Singapore goes nuclear?