Flash Trading Not New

NYT: A Short History of Fast Times on Wall Street

MANY fear that new technology is giving some investors unfair access to stock market information. Supercomputers allow certain traders to profit by executing trades in milliseconds, a practice known as high-frequency trading. These traders also use a technique called flash orders that gives them a sneak peek at other investors’ orders to buy and sell stock. High-frequency traders are said to have made $21 billion in profit last year.

This may seem like a 21st-century problem. But in fact, similar criticisms have been made for over 100 years, since the days when trades on the New York Stock Exchange were executed by humans using notepads and pencils.

Even back then, critics claimed that the exchange members who were physically present on the floor could get trading information and execute their own orders faster than anyone else. 

This entry was posted in Exchanges and Trading. Bookmark the permalink.