In the name of efficiency, one business sector has become inefficient, and that sector would like government regulation to restore efficiency.
The business sector: stock trading. The inefficiency: run-amok computer algorithms for high-frequency trading, HFT. There have been several cases where HFT algorithms have caused problems with initial public offerings and set off price-spikes that some firms couldn't handle. Firms may not put in sufficient checks on certain trades in order to gain speed.
"'Market participants at every level of the trade life cycle reported they are looking to regulators to establish best practices in risk management and to monitor compliance with those practices,' Carol Clark, senior policy specialist at the Chicago Fed, wrote in a summary of the survey's findings."
See "High Frequency Trading: Worse than You Thought", Jeff Cox, CNBC, 2012-09-20.
Next time a newspaper reports that "investors decided" ask yourself do they mean traders and do they mean trading computers.
