Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Fed Warns of Dangerous Markets

February 18, 2014 By Jeremy Jones, CFA

In a study that could only be sanctioned by the independent (read unaccountable) Federal Reserve, the astute researchers at the Fed Bank of Chicago have come to the profound conclusion that faster and less transparent markets (aka high-frequency trading) pose dangers that aren’t properly appreciated. The investing public recognized the dubious role of high frequency trading about 2 hours after the 2010 flash crash. Leave it to the Fed to slam the barn door long after the horse has bolted.

Bloomberg reports:

Faster and less transparent markets pose risks that require more study, according to the Federal Reserve Bank of Chicago, which said high-speed trading may create dangers that aren’t properly appreciated or policed.

“One may also argue that the movement toward HST is part of a natural, evolutionary outcome within financial markets, not unlike the adoption of automated or computer-based systems in every other major industry,” Clark said. “Nevertheless, it is difficult to find examples of firms in other industries that were rapidly brought to the brink of bankruptcy due to technological malfunctions like the 40 minutes it took Knight Capital to lose $460 million.”

While market manipulation has always been a worry, it could be harder to spot today because high-speed firms “trade correlated products across multiple asset classes and trading venues around the world,” Clark said.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Dow Jones Industrial Average 30 Stocks
  • The Four Stocks Propping up Global Equity Markets
  • Automation is Making Markets more Volatile
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Is the Great Job Boom Over? - June 24, 2022
  • Will ESG Do to Steel Prices What It Did to Gas Prices? - June 23, 2022
  • Apple Shares Resilient in the Face of Recession - June 22, 2022

Search Young Research

Most Popular

  • Will the Fed Stick to Its Course?
  • RECESSION? Dow 25,000, $8 Gas, Rising Interest Rates, Spell Mid-term Crack Up
  • Investing During a Recession
  • Swiss National Bank Surprises World with Rate Hike
  • Kellogg Cuts Loose with Split Plan
  • The Power of a Compound Interest Table
  • MONEY TALKS: The Best Service in Paris
  • Predictions of MEGA-SPENDING on Metaverse
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Apple Shares Resilient in the Face of Recession

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Greetings From Paris & Le Bristol Hotel
  • The Most Controversial Restaurant in Paris?
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More
  • Russia’s “Unsubtle” Artillery Attacks Not Necessarily “Archaic”
  • FLORIDA DODGED A BULLET: Elected Superb DeSantis Over Unstable Gillum
  • Biden, a Job Killing Machine
  • Good News for the 2nd Amendment
  • La Fontaine De Mars: Best Sunday Paris Lunch
  • My 10 Favorite Books about France, Plus a Bonus for You
  • BREAKING: Supreme Court DISMANTLES New York’s Unconstitutional Gun Laws

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.