Life is weird sometimes.
I had a pretty great week last week. I got to go to Chicago early in the week to speak at a conference on high-frequency and algorithmic trading and meet a lot of interesting–and frighteningly smart–people. I always enjoy getting my nerd on with other academics and policy wonks especially when combined with industry experts and a guy who started university at 14 and now builds neural networks to create artificial intelligence-type systems to trade stocks. For about 2 1/2 minutes I was even able to hold my own in a conversation with him about how his systems handle outliers in their outputs.
Being in Chicago also allowed me to enjoy their freakishly warm 70-degree temperatures while Alaska was experiencing slick roads due to freezing rain and snow. Upon returning home I received another speaking invitation and an offer to be a guest on Reuters Global Markets Forum. Like I said, not a bad week for an Alaskan academic.
But my week got even more interesting on Friday when I discovered I had become Reference 95 on the High-Frequency Trading Wikipedia page. As it turns out, someone had written an article (here) about a policy paper I wrote for the CATO Institute (here) and they both showed up as references.
Granted, this is not exactly why I went to graduate school or something most people aspire to, including me. However, what I like about this particular reference is that it shows up as a single sentence of rationality within a sea of dialogue about how the government is the answer to all problems great and small related to computerized trading. Under the heading ‘Violations and Fines’, subheading ‘Regulation and enforcement’ it says:
“In response to increased regulation, some have argued that instead of promoting government intervention, it would be more efficient to focus on a solution that mitigates information asymmetries among traders and their backers.”.
In other words. rather than fighting with legislators and regulators about what the most risk-free market structure might be and creating a Rube Goldbergesque tangle of regulations designed to regulate regulations, why don’t we let market participants anonymously share their problems and errors with one another and work together to find solutions to real, rather than perceived financial market issues. Threats of fines by regulators are not prevention, only a system of punitive measures once something has gone wrong. Our best hope for minimizing the risk of a major market event like a Flash Crash exists within the market participants themselves.
Dr. Holly A. Bell is a wanderer, ponderer, language learner and slaughterer, an optimistic pessimist writer of poetry and novels, and an interdisciplinary professor of Finance, Economics, and Business at the University of Alaska. She lives, loves, and writes in the Mat-Su Valley.