A single algorithm which placed and then cancelled orders on the Nasdaq accounted for 4% of all quoted traffic in the US with no clear goal. An investor gives FRANCE 24 his insight into the mystery which has concerned market watchers.
by Sébastian SEIBT
A single mammoth mystery algorithm has set alarm bells ringing for market regulators and players, and underlined the market’s vulnerability to technology and the woeful lack of regulation on algorithms.
A single algorithm last week placed and cancelled orders on the Nasdaq accounting for 4% of all quoted traffic in the US. Not only this, it also accounted for a colossal 10% of the bandwidth that is allowed for trading on any given day.
It placed orders in 25-millisecond bursts, involving approximately 500 stocks, but never actually executed a single trade.
The algorithm’s stopped operating at 10.30am ET on Friday.