October 2, 2010
THE RIGHT'S BIGGEST BLINDSPOT...:
How a Trading Algorithm Went Awry
Flash-Crash Report Finds a 'Hot-Potato' Volume Effect From Same Positions Passed Back and Forth (TOM LAURICELLA, KARA SCANNELL And JENNY STRASBURG, 10/01/10, WSJ)
The eagerly awaited report on the causes of the May 6 "flash crash" portrayed a market so fragmented and fragile that a single large trade could send stocks into a sudden spiral.The report, released by federal regulators on Friday, went further than many in the market had expected by pinpointing one trade by a mutual-fund company as a key contributing factor to the market's plunge.
Regulators say that the firm— which was Overland Park, Kan.-based Waddell & Reed Financial Inc., according to people familiar with the trading—chose to sell a big number of futures contracts using a computer program that essentially ended up wiping out available buyers in the market.
A spokesman for Waddell refused to comment beyond the firm's previous statement from May, in which the firm said it doesn't intend to "disrupt" markets through its trading.
...is that in a system that is designed to guard against agglomerations of power by any of a series of institutions they don't care how much power resides in corporate hands.
