Knight Errant?

Knight Capital turned on a new HFT algo yesterday morning and it went Robin Hood on them. Instead of stealing money from other traders as designed, it handed out Knight’s money to other traders to the tune of some $440 million. Knight is now bust.

Well that’s one of these parasites down. Hopefully more will follow. These “HFT” outfits aren’t trading; they’re stealing. The only difference between them and the charming folks who steal from credit card accounts is that they steal from people’s trading accounts instead. What they do is steal a slice of every order by using their ability to jump ahead in line. They claim that they are “adding liquidity.” Nonsense, they don’t hold a position for any appreciable period of time so there is no transfer of risk. The fact that they are allowed to exist shows that the regulators are either stupid or corrupt. Or both.

That one of the “HFT” thieves was hoist on its own petard is great news.

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