*Nobody is less surprised than me to see that interacting pieces of software can do weird emergent stuff, and act all buggy. This is not, like, some surprising discovery. It's more like a law of computational physics.
*For the stock market to go into a "tornado" of dark pool trading is not all that great, though. Especially when days tick by, and nobody knows what the hell actually happened. This is not a chaos-theory lab experiment: this is supposed to be the bedrock of global capitalism.
*That is not a stable market, folks. That's not a free market, either. Why would any sane person have any confidence in the behavior of a creation like that? It's like a series of mechanized panics waiting to happen. Ivan the Terrible had more common sense than this rickety robot.
*And I don't wanna get all cybarmageddon here, either. But all we need is like the whisper that our sinister Chinese underlords are manipulating these markets with some covert hacks, and the tender, trembling, shy woodland creatures who are our global rich are gonna completely wig out. They'd blow up the Parthenon if they thought they could save ten cents on the dollar. What safe haven do they expect to find? What other planet to do they think they're gonna put their money on? How did we ever get into such a flaccid and miserable and unnerved condition? We're as shaky and decadent as the drug-addled degenerates in a Fritz Lang "Dr. Mabuse" film.
“The technology has gotten ahead of the regulators and the regulators need to get ahead of the technology,” Shelby said on CBS’s “Face the Nation” program. “That is going to be a big challenge down the road. Otherwise, we could have more of this.” (((You ALREADY had more of this. It's been going on for years, and all you do is chant nostrums about the ineffable wisdom of free enterprise.)))
"The House Financial Services Subcommittee on capital markets will hold a hearing tomorrow to examine last week’s stocks plunge. Officials from the SEC and exchanges have been asked to testify, said a person familiar with the matter. (((Oh well, that's comforting. Thank you, "familiar person." Way to go in being the adult in the room.)))
(...)
"Regulators are reviewing a drop that briefly wiped out more than $1 trillion in U.S. equity value as the Dow slid almost 1,000 points before paring losses. Concern over the integrity of markets may have contributed to the Standard & Poor’s 500 Index falling as much as 3 percent May 7, a day when the U.S. reported the biggest growth in jobs in four years.
"Dark Pools (((Or, as Dr. Mabuse liked to murmur when enchanting his hapless victims, "Melior," "Tsi Nan Fu")))
"The SEC, in a May 7 joint statement with the Commodity Futures Trading Commission, said it is reviewing data from exchanges and will make findings public once the agency determines the cause of the crash. The regulators pledged to make “structural” changes to markets if necessary. (((This is like going to Monte Carlo to inspect the roulette wheels after the prince blew his brains out.)))
"SEC staff are examining innovations in U.S. stock markets, including high-frequency trading and private trading venues known as dark pools that don’t display prices publicly.
The agency in October proposed rules to address concerns that dark pools were growing too rapidly and drawing volume away from regulated exchanges. In an attempt to better track high- frequency traders, the SEC last month proposed regulations that would assign computer codes to market participants who buy and sell at least 2 million shares a day. The SEC hasn’t finalized either rule...."
(((Later: this just in from the masters of finance:)))
http://www.theawl.com/2010/05/guest-op-ed-by-the-machines-did-you-get-our-message-yesterday
