Algorithms
Fast becoming a pantomime villain for regulators, as demonstrated by the European Parliament’s proposed curbs on high-frequency trading (see Reg Rage, page 204). The 'flash crash' in US stocks in May 2010 triggered the debate about the danger of computers operating trading programmes that are too fast and complex to be supervised by humans. There was plenty of fuel added to the fire in 2012. US broker Knight Capital suffered probably the fastest financial distress in history, losing $461m, or the majority of its capital, in a single morning due to a trading software error.
