[This message was posted by John Harris of BondMart Technologies, Inc. <[email protected]> to the "Algorithmic Trading" discussion forum at http://fixprotocol.org/discuss/31. You can reply to it on-line at http://fixprotocol.org/discuss/read/097e1cd5 - PLEASE DO NOT REPLY BY MAIL.]
Did algorithms lie about the market value of assets on the balance sheets of big banks? Did algorithms create the "too big to fail doctrine" and saddle future generations of children, some not yet born, with debts they didn't incur and can never repay? Did algorithms create fiat currencies or lever equity 100 fold? Did algorithms mandate the payout of 50% of bank revenues to people other than shareholders? Did algorithms create the absurd, childish notion of a "national market system" or approve bank holding company applications of Goldman Sachs and Morgan Stanley in two days, over a weekend? Did algorithms assign Aaa/AAA credit ratings to third derivatives of pools of stated-income loans? Did algorithms put the the full faith and credit of the people of the United States behind the liabilities of GE Capital, American Express, and a host of other fascist companies that have been allowed by corrupt politicians to make one-way bets on the backs of present and futures generations of taxpayers? Might it just be that all of us who love our families and children, who understand the economic importance of competition and free markets, have better objects of concern at the present moment than algorithmic trading? Sheesh. I guess the Romans proved that bread and circuses really do work. > Considering the sheer volume of trades/orders generated by algos a tool > to monitor what is going on will be necessary. It can't be done by > humans or who would bare the cost? I believe its the lack of tools and > the evolution of this type of trading that is way ahead of the ability > to monitor what these algos are doing. They are unpoliced and probably > will be for sometime. > > > Indeed, in my point of view > > > > The algorithms must not be controlled by algorithms, but the market > > monitoring or risk management that should be a completely independent > > infrastructure. > > > > > > Regards > > > > Jaime Romanini > > > > > > > > > It's an interesting, and reasonable, question, but it doesn't make > > > sense to position this as a problem with the experience level of the > > > users of the algorithms - it seems to me that this is more a > > > question of needing better risk management capabilities on the side > > > of the systems that are interacting with the algorithms. > > > > > > > May 7, 2010 Katherine Heires @ securitiesindustry.com > > > > > > > > While trading algorithms are regularly praised for their speed and > > > > efficiency, a growing contingent of professional traders, > > > > financial engineers, consultants and academics say they are being > > > > misused, or are faulty from the start. Their answer? Establish > > > > best practices and increase training to keep algorithms from doing > > > > more damage than good. > > > > > > > > The impetus for the movement is the fear that the availability of > > > > sophisticated trading strategies to a wider audience with varying > > > > levels of expertise could cause havoc in the markets--and already > > > > has, in the view of many.(...) [You can unsubscribe from this discussion group by sending a message to mailto:[email protected]] -- You received this message because you are subscribed to the Google Groups "Financial Information eXchange" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/fix-protocol?hl=en.
