Thursday, September 16, 2010
- CNBC: Man Vs. Machine
The much hyped CNBC piece on algorithmic trading is going to run today and I have to confess, I'm dreading it. I'll give good odds that it obfuscates the problem far more than it illuminates it. At it's best it's a complicated problem that even many people in algorithmic trading don't fully understand. And it's WAY beyond the ken of the trained chimps and 'journalist' experts at CNBC.
Central to algo trading of course, is HF trading. Not all High Frequency systems are a problem, in fact many are a great help to providing liquidity. But there is simply no way that CNBC will be able to show that. They aren't in that business. They are in the business of identifying a villain. They want to find someone to blame for problems, not help to solve them. And since the light has gone on over some producer's head about how some HF programs are gaming the system, I think they believe they've found a bad guy.
I get that this is a mass media program designed to get ratings and sell stuff. I'm OK with that. But this is one of those stories they won't be able to tell accurately, so I would just as soon they not try. By mislabeling the issue, they will become a part of the problem rather than a part of the solution.