‘Technological Arms Race’ Has Captured Global Finance: ‘Trading Once Took Minutes, Now Handled in Mere Nanoseconds by Computers’

As it becomes increasingly clear that fewer and fewer hands control the wealth of the planet, the manipulation of the market seems obvious enough.
No doubt, technology is playing an important role, but few have any real idea about the extent to which the notion of day trading from the floor of some market is completely obsolete, and how completely orchestrated things really are.
Today, high frequency trading is conducted by computer algorithms that predict market behavior and make rapid investment decisions mere mortals could never keep up with.
In 2012, Zero Hedge reported that a whopping 84% of ALL stock trades are conducted by high frequency trading computer systems. 84%!!
A new study of related technology patents confirms that this is taking place on a larger scale that anyone even realized:
The way financial assets are traded, and the nature of the markets themselves, has dramatically changed over the last two decades, says study co-author Dr Ivan Diaz-Rainey of the University’s Department of Accountancy and Finance.
‘Trading a share-once a hands-on transaction taking around two minutes-is now handled in mere nanoseconds by computers in many markets around the world,’ he says.
‘A ‘technology arms race’ is well underway as firms vie to shave even more time off trading and maintain their competitive edge. But it’s not just about trading speed. We’re seeing technology used more when firms are first issuing securities and even the use of neural networks in portfolio selection.’
Yes, neural networks. As if the Federal Reserve era of finance wasn’t skewed enough already, for some time now there have been computers actively learning how to better game the system (and you).
And they have taken over almost everything.

This post was published at shtfplan on January 26th, 2015.