HFT, NASDAQ, System Failure

In Markets' Tuned-Up Machinery, Stubborn Ghosts Remain - NYTimes.com: "Why is this happening, and happening so often? One reason is the need for speed. Another is increased competition. The need for speed comes from a market in which high-frequency traders expect to be able to get in and out of positions within a second. Any market that cannot offer such speed will be at a competitive disadvantage. But such speed is not compatible with safety features that could cause suspicious orders to be delayed while someone — a slow person, perhaps — checked to see whether something was amiss. The competition comes from the fact that there are now numerous exchanges for every stock. That has caused the cost of trading to plunge. But it has also meant that each exchange is under pressure to keep costs to a minimum, which itself could be a deterrent to safety features."

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