I recently watched Ghost Exchange, a primer on the evolution of HFT and its impacts on various markets. Ghost Exchange covers the multitude of flash crashes and trading abnormalities that have occurred over the past couple of years. The chart above is from May 22, 2012 and shows the NASDAQ going silent (no quotes/trades) across all equities for 17 seconds, a lifetime in HFT trading, right before Facebook started trading (Nanex). To understand the repercussions of the evolution of algo trading and what it means for regulatory bodies attempting to protect market credibility and retail investors, I encourage you to watch the film in its entirety.
Eric Hunsader, CEO and founder of Nanex, presented on HFT and other abnormalities at Wired’s Think Bigger conference which took place earlier this month:
[Photo: Nanex – Nasdaq Radio Silence]