Video - Welcome to Capital Account.
Tomorrow marks the 25th anniversary of Black Monday, the New York Stock Exchange's largest single day drop, in percentage terms, in its entire history. One explanation for the 1987 crash was selling by program traders, exacerbated by panic and fear. With the rise of algorithmic and high frequency trading we ask our guest, Nanex founder Eric Hunsader, how the increase of market bots has altered mr. market.
Plus, a high frequency trading firm started by former Citigroup executives closed its doors this week; lower volumes, due to a drop-off in trading by retail and other investors, have led to smaller profits for high frequency trading firms, according to the Wall Street Journal. Did unchecked high frequency trading advantages drive other investors out? We talk to Eric Hunsader about what it might take to get fairness back into the market place.
Also, the CEO of PNC Financial Services told CNBC that computer hackers pose an increasingly grave challenge to the US banking system. Just last week Secretary of Defense, Leon Panetta, referring to threats facing the US in cyberspace, said "The collective result of these kinds of attacks could be a cyber pearl harbor." False flag or not, it underscores the increasing role of computers and software everywhere, and for our purposes, in the banking system and financial markets. Perhaps there is no greater example than the rise of the 'quants' and computer algorithms that dominate the stock market. Eric Hunsader, founder of Nanex, tells us all about the issues and practices of high frequency traders from the frontlines.
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Nanex is the creator and developer of NxCore, technology that powers the delivery of a streaming whole market data feed from Telvent DTN with an easy to use API. Nanex supports NxCore and develops applications that run on the NxCore platform.
NxCore (pronounced n'core) is a high-performance ticker plant that brings the whole market to your workstation or desktop computer. NxCore excels in delivering and databasing all the quotes and trades transmitted by the exchanges, even in the hyper-active U.S. Option market (OPRA) which now transmits over 4,500,000 quotes per second, and 8 billion quotes per trading day.
Nanex
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Nanex: Investors Need To Realize The Machines Have Taken Over