iSys's CEO Terry Keene looks at the charges against high frequency trading.
High frequency traders. They’re the ones
causing all the chaos in the markets. That is if you believe
all the financial press and television pundits. Their
electronic trading algorithms can execute many thousands of
trades a second to try to pick off a handful of PIPS
(hundredths of a penny) per trade. Volatility is HFT nirvana.
The more that prices move, up or down, the more opportunity
there is to pick up a PIP or two.
What that means is the HFTs can move markets using
clever trading and cross trading schemes. And, according to
conjecture, these guys are to blame for all the demises
suffered by the markets from the Flash Crash of May 6, 2010 to
the botched IPO of BATS and most recently the debacle suffered
by Facebook in their May 18, 2012 IPO just past. And
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