Nanosecond Trading Could Make Markets Go Haywire | Wired Science | Wired.com
The programs are designed to trade enormous volumes of stocks, bonds and other financial instruments at superfast speeds, taking advantage of second-to-second fractional price shifts and market trends. It’s now estimated that high-frequency computer trading accounts for 70 percent of all equity trades. While some activity does occur at speeds with which humans can interact, much of it falls beyond the limits of human response time.
(One new computer chip built specifically for high-frequency trading can prepare trades in .000000074 seconds; a proposed $300 million transatlantic cable is being built just to shave 0.006 seconds off transaction times between New York City and London.)…
“There’s a danger of Europeans doing some changes they haven’t thought through, and there’s danger of the United States not changing things they need to change,” Farmer said. “It’s hard to think these things through, because nobody understands them.”
(Emphasis mine.)
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