Obviously the big news today is Osama bin Laden but let’s not forget about the markets. The good people at Themis Trading continue to research the inherent risks HFT pose to the markets. When will the regulators finally put into place some kind of functioning protection? The risk of another major flash crash only grows by the day.
The increased use of computerized algorithms in the markets is not only leading to a false sense of volume but also an increased risk of cyber attacks on our financial system. As we have discussed before, we continue to be concerned about the underlying risks of HFT algorithms. HFT themselves cause us worry about another flah crash until they are regulated but add in the risk of a cyber attack on our financial system and the magnitude of an event like that is unimaginable.
This time the flash crash hits the venerable tech titan Apple (AAPL). I don’t think the story is the 3% “Crash, ” as much as it is about the speed, volume, and cascading bids. Either some amateur put through a few million shares in a sell block, or maybe someone’s computer had a glitch. Either way, there’s nothing to worry about… we’ve got the Bernanke Put!