John At The Center

How big is high-frequency trading?

To put it another way, I don’t think people are making billions of dollars in profit just by being fast. But there are definitely people making billions of dollars in profits through strategies for which being fast is a necessary precondition

This is why I’m sympathetic to Paul Wilmott’s view of all this: there’s simply too much complexity here for comfort, and too many things which can go wrong. When the stat-arb shops imploded in the summer of 2007, the systemic consequences were mild-to-nonexistent, and that does provide a certain amount of reassurance. But we can’t be sure that if and when such a thing happens again, the consequences won’t be much worse.