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"High Frequency Minutes": HFT Explained In 6 Short Video Clips
You can download the videos and then play them locally. Registration not required. The videos are okay for what they are - a collection of very basic thoughts about HFT.
He suggests that with a "runaway algorithm" the market could easily drop 3000 points (~30%), but I don't hear him discussing how such an algorithm would interplay with circuit breakers (at the 10% mark for market moves) in place for the past decade, and on individual securities for the past year in response to the flash crash.
He says that the breakup of the Bell System was because AT&T resisted testing interoperability of equipment. A bit simplistic. On the one hand, this understates what AT&T was doing - it went so far as to write specs designed specifically to exclude competitors' equipment, regardless of whether the requirements were technically necessary. On the other hand, AT&T wanted dearly to get into enhanced services (like what it called at the time Advanced Mobile Phone Service - cellphones) - which it could not do as a regulated entity. Thus it was more amenable to settling by divesting the phone companies (which it viewed as dinosaurs) than was IBM willing to deal with the government at the same time on antitrust issues. See, e.g. http://iris.nyit.edu/~shartman/mba0101/trust.htm
I'll agree with his thesis presented in the first clip, though. That "trading that occurs in microseconds should not matter to Aunt Minnie in Lenexa, Kansas." In a later clip, he reiterates that the impact of HFT on the traditional investor is overstated.
Comments
He suggests that with a "runaway algorithm" the market could easily drop 3000 points (~30%), but I don't hear him discussing how such an algorithm would interplay with circuit breakers (at the 10% mark for market moves) in place for the past decade, and on individual securities for the past year in response to the flash crash.
He says that the breakup of the Bell System was because AT&T resisted testing interoperability of equipment. A bit simplistic. On the one hand, this understates what AT&T was doing - it went so far as to write specs designed specifically to exclude competitors' equipment, regardless of whether the requirements were technically necessary. On the other hand, AT&T wanted dearly to get into enhanced services (like what it called at the time Advanced Mobile Phone Service - cellphones) - which it could not do as a regulated entity. Thus it was more amenable to settling by divesting the phone companies (which it viewed as dinosaurs) than was IBM willing to deal with the government at the same time on antitrust issues. See, e.g. http://iris.nyit.edu/~shartman/mba0101/trust.htm
I'll agree with his thesis presented in the first clip, though. That "trading that occurs in microseconds should not matter to Aunt Minnie in Lenexa, Kansas." In a later clip, he reiterates that the impact of HFT on the traditional investor is overstated.