these currents of the turks could be a sharper pearl harbor wow false flag or not it underscores the increasing role and importance of computers and software everywhere but for our purposes we'll focus on the role in the banking system and the natural markets and perhaps there is no greater example than the rise of the quantum computer algorithm son executing at breakneck speeds now dominating the stock market in fact in the same time it took me to say that last sentence around a half a million orders were placed i'm told now is the algos had something to say to us mortal humans who dare to dabble in the same stock market we imagine it might sound a little like this. you. know the truth. and maybe were afraid of change for good reason thanks to the company known as

manics we know too that this is what the change looks like this jeff shows the rise of high frequency trading start of the beginning of two thousand and seven to two thousand and twelve right there you're seeing in kind of the height of it now this animation became very popular on the blogosphere around the time of night capital's high speed algo trading debacle over the summer here to tell us about it in person though the issues and the practices of high frequency traders from the front lines is next founder eric can say or so first let me just say thank you so much for being on the show we're so excited to have you. because also i cannot tell you how many tweets i got from people from people in the industry saying this guy was ahead of everybody else he is a trailblazer in this industry and in this space so first just for our viewers i don't know you tell us what you do in briefly what your role is in this whole kind of high frequency trading space. well i like to process lots of data i've

been working with the syrians she says eighty six so it's some christian who want to do this summer in this office. and so i've had a real time system of interest for us since then and. you know we assemble it. get it put it together package it in and so civil service. and then what about at the high frequency trading because you've really seen it from the front line so what's been your role in monitoring that. part of what we do for a real sense of service is not a sort of you know a second by second because i was looking at it from many different angles and examples of these changed is for example one example open up within seconds something was wrong which is a lot less that it took knight capital took. people argue way too long to figure out what was going on now you watch markets very closely you've been watching high

frequency trading for a year or so when did you really see it take off because i know i've been told it kind of started to get its worth around eighty six but when did it really explode. so why maybe seven words the first occurrence where we started seeing these new algorithms that were lasting lots of food orders in the morning and then when did you really see the volume in the amount of high frequency trading take off well that's pretty much was the birth. never really have an acceleration period it was pretty linear from there i go up and down. in general. trend. ok and i know because when we were talking you said that after the passage of reg and m.m.s. you saw a kind of an explosion go on why was that a pivotal turning point. as it was a regular asians that industry two thousand and six. two thousand and six and it

was probably good who plays so. you know really changed the structure of the market and took them a couple months to figure out how to score but then that exploit a way they did right yes that's exist so then let's talk about some of the issues and the concerns surrounding high frequency trading for market participants both for individual investor retail investor but also on the m. pact on the market as a whole because it's hard for me to imagine that it's good for the ecosystem. or sort of diversity of approaches appearance is it boils down to the chase to where everybody you can compete on speed the people who are really going to. lose of dollars worth of equipment. wants. to do you know going to say informational on target who are going to mass what about for the average

trader though just should it matter to them that they can't exploit a millisecond. no doubt a lot of the problem is that with this of a couple problems one without the burst of diversity occurs and spreads whenever something unexpected happens perhaps google safford him severely impact the market in a way that. could cause prices based on some work because he promises to severely affect you. in so we that risk is there because people the diversity of persistence read different viewpoints on the market and maybe will want to buy in more than ten percent there are are going to be there because the information they're receiving is delayed or is untrusted or the changes might selectively cancel some orders and others are going to be reluctant to pull the trigger and so you don't really have the buying power available it's not that

they are anymore and is there a problem kid that without those folks in the market you have the algos that are all reacting that are providing the illusion of liquidity and that they're all programmed to pull out when they catch any signs that things there are i know yes. we saw the just evaporate up from google which was pretty surprising to see it impact the market like you did a minute from a pretty pretty moderate. to our absolute absolute. well we were on the edge of the song as long as no other bad news came out the rest of the day would be fine if the one they were going to get were not to be so lucky to get away from them. and of whom the average investor has to say sounds that everyone sort of knew to go to barber so they're going to be facing this target of liquidity. if they think it was looking for a single use market order which started the moment when the regulator tells you

there are you know suppose these murders and it's usually something that you don't have we're going to war but let's say he makes a mistake who is supercomputers and he's not promising to defend us nobody makes a mistake there's a moral progress so he's going to get it if you will promise is not. going to. so right right so there are a lot of consequences there before we get further into them and also how we can kind of i do some of this i do want to ask you to clarify for everybody because since the flash crash and since knight capital we hear a lot about high frequency trading we hear a lot about algorithmic trading they're often lumped together but they're not the same thing so can you just differentiate for us how you think about algorithmic versus high frequency trading and any misconceptions you want to clear up. well there is no saying again this is.

around tables discussing how to find them. how do you define i frequency trading is trading that's based on. a boat you have there because. it's about. how you special order to be able to do those kinds of the and algorithmic is kind of the informational aspect right this software or the cognitive ability to execute these kind of trades yes yes that they can but you can definitely over so that so there is overlap so one question for you is which is the more exploitative or or the edge really coming from is it coming from the algorithmic software or is it coming more from this speed you know it's not really . or however you can see or some kind of phone use of are exploiting the regulations are now on the rules rather than

a sleaze are the rules you know we're really concerned with conservative how fast trudy goes we're concerned with those who broke the rules right so you're saying to me you know it's not understanding every technical thing it's about following the rules and just to give one example of how some of these tactics is manipulative tactics play out and can affect the whole market you were just telling me one example of rattling the beehive what does that do what's the impact there i mean to be a good beehive. if you know if the workers i was in caught it you'd say your positions were. because. there's definitely words to. them and it's americans receive that see. you there on your stupidity and we're some of the storm hundreds of millions of dollars is where you have to do that. right and then how does this play out and market with exceptionally low ball attila

because right now the vix is that fifteen pretty much doesn't get lower than this one how does that work when volatility is this low. well. it started with. nobody wants to put their orders in the book anymore were just about to quit or you know what it was the police orders to buy or sell off the market was higher or lower because they find you don't have a speed advantage there will you be filled with this event and so they change their strategies around you more. last minute placing orders or you know are already crossing because. what it ended up with is less well. be that we build a liquidity machine that somebody doesn't need i really you know really romas the more you can do it with in terms of the wow ok well eric i'm an old you're right there are considered founder of man x. is with us he'll be back in just a moment on the other side of this break still ahead we've talked before about

regulators being late to the party with high frequency trading so is there any hope that enforcing the rules will happen and even if they are is it enough to curb some of these problems we'll get to that but first your closing market numbers. should free. education free. for charge free richmond's free. three stooges free. download free blog videos for your media projects c.d.o. done to our teeth dot com. culture is that so much of and there's

a huge music machine on the market for serious plays as the. world faces off supporting different sides fighting the syrian civil war rebel groups within the country struggle to unify. the for. peace soon which brightened. songs from fans to christians. who scream stunts on t.v. don't come. i'm in sochi but know your city in europe i'm a host of the twenty four team which are the biggest. sunshine. thank you. such

a. thing the. way a. dog days or. the pride days it. takes to calm. the sudsy it's so true. wealthy british style. markets why not come to. find out what's really happening to the global economy with mike's cars or for a no holds barred look at the global financial headlines tune into cars a report on our.

welcome back as i mentioned at the top of the show tomorrow as the twenty five year anniversary of what's known as black monday it's the day this stock market plunged in one thousand nine hundred seventy no trader will ever forget from those i've spoken to so fast forward and there are many many more algorithms that are that are

responsible for executing that the trades are going on with the new york stock exchange so does that make a crash better or worse more or less likely let's us are asked our gas because he watches all of this so closely air consider founder of next so financial markets mr hunter of always been volatile they've always had wild swings we have the anniversary of the crash of one nine hundred eighty seven to remind us of that now that so much of that is done by computers so much of the trading is that better because there is less of the human fear and panic or does it simply mean that there are more compounded by how fast they are and compressed by the high frequency trading. well in order to go faster than your neighbor and that's really what this is all about you have to execute lesko means you know kind of like things checking on a little video of you know is it ok to biomarkers up down ten percent what we don't

care about is when you're going to get out of korea so what happens is you get involved as of algorithms in what they're going to become legal analysts and some people could figure out how to cause the lemmings to do things they don't want to do and individually the market and you've got a very complex system here and complex systems are you know it's not run perfectly when things are not so for so all well that's going to take is a bad news of them when maybe a little worse than google's. because the algorithms just shut down and we're some of them just all of the lettering on top of each other so do you think it's that crash as if we if we had one that there's the potential for them to be worse than they used to be when it was humans doing all this. worse i don't know if the last are absolutely faster ok the problem now is it's not really. well women have

used conquered rules and we're going to hold the stock and in whose orders of trees are going to be broke you are not going to be broken. those wounds still have confidence ok and that's those are a couple of issues that i want to get into because one of the things i often hear from from folks that watch this is that it's just gotten so fast and regulators are just so behind and so late to the party i want to know your view on that and especially since last month we did get a fine from the f.c.c. to the new york stock exchange for them getting information more quickly to proprietary the people that had their proprietary feed versus everyone else so what do you think is the state of regulation of this industry well you know you can see trading you don't have to understand where things are going to you know it's really all over one class of people who are not for the.

simple and the fine levied by the u.s. you see was simply enforcing the rules for the first time since reagan is. you know what probably more important than the form is sort of the wording on the phone which you can see this these things are not legal these things have become so commonplace you know my theory is that the scene was going to go full tilt and now a story for seniors we're going to have a body of work for you to wall street because they come wow but do you see an impact when you're looking at your screens after we have that enforcement action or there was another against a firm for layering in knight capital mary shapiro wouldn't cancel the trades for knight so what in fact you see well yes well it's interesting so. i'm a member of the myriad ship. i have

a number of color of my triggers there. it is the garbage you can make a phone card these are shows there are two classes of. people. we have seen significant names of birds. in the only day or so. we suspect my suspicion is the reason that it seems some of these homes are trading from souls are is because. they're not see the writing on the wall they go if they hear the hear exploited exploit break the rule. here and that will not lead to profitability they're going to pull out and it's interesting you know they're claiming you know not being profitable now when it wasn't very long ago some of them had now you days straight in a row or profitability was just unbelievable you were not there were big

they were on a couple of days and they were just on. just as some people didn't like raise their eyebrows right right so you think that these stories about frequency trading firms shouting because that they can't be as profitable anymore you think it's actually more tied to the fact that they're starting to be regulated yet think yes i'm sure i'm sure why and you actually do notice a difference in the manipulative processes on your screens since these enforcement actions absolutely crystal clear. wow so do you think there needs to be more actions that kill switch or transaction tax or do you just think the z. to be enforced what's on the books if it is for some books music transactions and i was we were. going through. it with the things of their person really if they're going to try to pass new regulations were there not words important system regulations this is take you seriously i wouldn't take him seriously if you know

this is of course what regulations you're you have your new business premiums i totally hear you there before we go then what's your best advice for the average investor if they want to have a fair market. you know the rules. are simple and i just want one more second before we go should occupy wall street be on the street protesting this you mentioned them this treaty is the poster child for wall street protesters a good looking or just oh you know you just don't know yet well we know a lot more now after hearing from you thank you so much eric consider founder of man x. for being with us today. ok

let's wrap up with a loose change jimi turco phoenix riddle me this what is going on in media it's a story we hear many times but hey perhaps here is another sign of the times newsweek magazine announced today that it is ending its print edition moving to an all digital format once upon a time the magazine claimed it was the most efficient way to stay up today. now more than ever newsweek is what the news weekly was meant to be the most efficient way to stay up to date with the with the stories of comprehensive and timely the photography is dramatic the style is unlike most of all there's new research unbiased journalism. unbiased journalist them is one way to gain subscribers i guess now it's not paying the bills if you're a print magazine like newsweek it cost forty two million dollars to print and distribute the magazine dimitri what do you think that this is symbolic in terms of

what's coming up in the world two things struck me how much things have changed since a stay at the speed you can't possibly stay up to speed if you were to wait for used to be so for the coming was on bias there's no way you're going to make any inroads of media today if you're not bias it's a whole like fox news literally change that paradigm and not the right so that everyone has to be biased so those two things straight out well not everybody but if you know one has a point of view today that's not to say by bias right everyone's got a point of view and they make it very clear this is this is my point of view and i'm coming at you from this direction so i just think that's interesting but i mean they've. changed so much of what i would get a newsletter ninety nine from the daily reckoning that was extraordinarily rare most people weren't getting there was a newsletter right now you have blogs people just go online and they were they want and it's democratized things as well but it's also created like you know talk about hype from chrissy training before there's a high frequency information yeah i'm going to very much that much less fact

checking so you get a lot of crap and a lot of stuff comes out as rumors and so it's really interesting how you have to be more kind of. the arbiter of you know checking things out and what's true and what's false and whatever but i think that this speaks to too there are barriers to entry there are so many good sources of information that is the on the blogosphere or alternative media that i mean it only makes sense that like the big firms to compete they they need to be and it would be gauging in the alternative way yeah for sure they need to and i'm sure there are. a lot of people you know they still go to the york times or the guardian they still go to the financial times but we're . the water may flow to come it are coming the source is on you too but it's going to go exactly it's really great because it does democracy information and your brain has your brain this plot there's the plasticity of the human brain so people have a ball over this very supportive time to adjust the way they parse the information

but it's interesting i don't like reading a hard copy but i agree and you've got to give iraq is really a newspaper. i can't part with them let's remember greg smith for a moment before we go remember he was the former goldman sachs executive director resigned very publicly and his new york times op ed in his i quit letter greg smith a mid-level executive for goldman sachs said he was sick of a culture where clients were called muppets and employees were expected to hunt elephants by getting clients to make big trades that led to big profits for goldman . so we don't have much time dimitri but this is a war of the muppets because greg smith is publishing his tell all book it's coming out soon we're trying to get him on the show come on greg and goldman sachs is firing back a head of the book saying that he wrote the op ed after being denied a raise to a million dollars in a promotion so they're totally taking the typical oh this is just a disgruntled employee kind of smearing attack what do you think i don't know the

parts of the book that i have at least seen tease there really seem that and throwing if you could do that a better job well you know what why aren't when i read the story of course i was at first right but you know goldman sachs is good at spinning spinning the true meaning lies internally with the good out it's you know what i'm going to i'm going to hold a press judgment until you come on our show i'm going to wait until they have until he comes on the show with the president's original greg i reached out to your publisher we want we want to get back to us we want you here to slay the moon your daughters in law michael moderated boxing got all right that's all we have time for there we're going to leave it there for today thanks for watching be sure to come back tomorrow in the meantime you know you can follow me on twitter out lauren lyster or you can go like our facebook page right there tell us what you think about grades and you can give us feedback catch any shows you missed you tube dot com slash capital account watches the h.d.d. on hulu hulu dot com slash capital dash account while blue rockwell on tomorrow

stay tuned but for now have a good night. what's the strangest attempt to take. the u.s. president trying to overthrow the country's gulf but a strategic game. if a. question is if cuba managed to cope with its victory all don't talk to. get off me i leave you think you are you go but the rajab either live in the cuban missile crisis games and reality t.v. . gold fever.

turns thousands into slaves must follow but also among other involved in the monsoon and since i started working at the moment i stated i look at it. multinationals. cash cow to be milked dry and if i think that in this country is gold medal logie as an environmental cost which is unacceptable local business was labeled illegal and controlled by criminals in order to protect our lives our families and to work in peace. we are forced to pay protection to illegal groups prices colombia going to pay. the people the modest effect on our.

morning news today violence is once again flared up. these are the images cobol has been seeing from the streets of canada. china operations are all today. let. it. leak. out because leakage. to lift the. lid.