High Frequency Traders Love a Good Flash Crash

As it reported by TheStreet, following yet another electronic stock trading blowup — this time at Knight Capital investors may expect a withdrawal from computerized and opaque high frequency trading markets.

Think again. They are just getting started.

Although Knight Capital’s shares are off nearly 33% in Wednesday trading and the Securities and Exchange Commission says that it is looking into the “technical issue” that caused the latest Flash Crash, past blowups signal that high frequency trading will continue its unremitting stranglehold over stock markets.

The trading glitch at Knight Capital — which executed $19.5 billion of stock trades in June and is a big high frequency trading conduit to the public markets — led to unusual reading in 148 stocks listed on the New York Stock Exchange at the open. The yet to be explained electronic trading failure mirrors many past blowups.

In March, high frequency exchange BATS Global Market failed miserably at conducting an initial public offering of its shares on its own exchange, pulling the listing after its shares opened at 3.8 cents instead of an IPO pricing of $16

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