ZeroHedge: The Day The Market Almost Died (Courtesy Of High Frequency Trading)

[Ruby the Liberal]

Excellent analysis by Tyler (as usual). http://www.zerohedge.com/article/day-market-almost-died-courtesy-high-frequency-trading

Small sample:

A year ago, before anyone aside from a hundred or so people had ever heard the words High Frequency Trading, Flash orders, Predatory algorithms, Sigma X, Sonar, Market topology, Liquidity providers, Supplementary Liquidity Providers, and many variations on these, Zero Hedge embarked upon a path to warn and hopefully prevent a full-blown market meltdown. On April 10, 2009, in a piece titled "The Incredibly Shrinking Market Liquidity, Or The Black Swan Of Black Swans" we cautioned "what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades. When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility." Today, after over a year of seemingly ceaseless heckling and jeering by numerous self-proclaimed experts and industry lobbyists, we are vindicated

SNIP

In 20 minutes the market showed that it is as broken as it was at the nadir of the market crash. Through its inactivity to investigate the market structure, the SEC has made things a million times worse, as HFT-trading seminars for idiots are now rampant. HFT killed over 12 months of hard fought propaganda by the likes of CNBC which has valiantly tried to restore faith in our broken capital markets. They have now failed in that task too. After today investors will have little if any faith left in the US capital markets, assuming they had any to begin with. We need to purge the equity market structure of all liquidity-taking parasitic players.

[Selatius]

1. That is a very deep structural flaw that I fear won't be fixed any time soon.

Goldman Sachs and other big players use powerful computers running trading algorithms to beat people to the punch. It keeps them at the forefront, and I fear they will fight regulatory oversight over these machines.

[Ruby the Liberal]

2. Indeed. I have been cruising through all of the 'kill-HFT' blogs tonight

reading the 'i-told-you-so's. They were right.

According to Rachel, Soethbys (the auction house - which I may have misspelled) was trading in the $30s before and after the 'glitch'. During? $100,000.

That would make their market cap larger than the US and China combined.

She congratulated them on their 15 minute 'growth'. heh.