Finally, the SEC has begun to take some action. It's made a lot of progress in just a month, but a lot more needs to be done, as a series of reports written by David Weild for the accounting firm of Grant Thornton makes clear.
Opinions on high-frequency trading run the gamut. On one hand we find individuals who fear that HF traders are nothing more than "hackers" seeking to game the markets. But the extent of their hiring implies that the industry is enormously profitable and here to stay.
Other countries are using financial speculation taxes successfully; it's time we do too. The United States is in desperate need of a permanently robust and resilient economy. A financial speculation tax can help get us there.
They want to think that machines are biddable and programs run smoothly. But with traders and market makers creating and deploying new systems and algorithms constantly, the danger of something going wrong is inevitable.
The U.S. markets are on the edge of chaos right now. We've been seduced by the technological beauty of these intricately interwoven systems but are now being betrayed by the chaos and non-linearity of their interactions with each other.
You might think the experience of pulling Knight Capital out of the flaming wreckage of its high-speed trading crash might make Wall Street finally see the need for regulation of high-speed trading. You would of course be dead wrong.
We have no shortage of great ideas for how to help dampen or eliminate the ill effects of high-frequency trading. We simply lack the will and the ability to push meaningful reform through our corporate-controlled, hyper-partisan government.