Sunday, May 9, 2010

I don't get the trade reversals

From:

NYSE Euronext CEO Duncan Niederauer cagily blaming non-NYSE electronic markets for today's air pocket. He says NYSE was "going slow" because of market action, so trading briefly moved off-NYSE to electronic market, which were too thin to handle clearing all the orders. Result: Big drops.

Fine. So if this is a market feature, not a bug, why are we wiping out all the errant trades by runaway algorithms and market battle bots?

If the Bots are bad traders, then let them go in hunger. Why give the bots some sort of insurance?

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